You won't see a bump until a new bid is announced. As DaninFW has said, MEG stock price is locked to NXST's offer of .0898s and $10.50. When NXST makes a new offer of more shares or cash, you will see the bump.
MEG BOD has agreed to negotiate with NXST, however it has rejected the Sept. offer of $10.50 plus .0898 shares for each MEG share. MEG BOD says the offer "substantially discounts Media General’s standalone growth prospects, ignores the significant asset value embedded in Media General’s excess spectrum that can be monetized via the upcoming broadcast auctions, and does not reflect an equitable share of the synergies outlined in the proposal made by Nextstar.” MDP says the Boards' of both companies still recommend the MEG offer to buy MDP. MDP also says "Under the terms of our binding merger agreement, Meredith will have the opportunity to review — and propose an alternative superior proposal — to a potential agreement Media General might reach with a third-party."
Let the bidding begin.
Sentiment: Strong Buy
Looks like we will have some news by Monday. Ball may be in NXST court after board meeting tomorrow. I always thought MEG was worth $22 by itself by the end of 2016. I will gladly take $18 -$20 in July if offered.
You certainly bring up some good points, especially the management team. I can tell you I have been told that Deb McDermitt has been a disaster as far as merging the operations of Young, LIN and Media General. All you have to do is listen to Jim Woodward on the various calls and you absolutely know he should be replaced. Saduski had his problems at LIN, but to be fair, his tenure at MEG , which will end in a matter of months, has been marginalized because he cant touch any of the existing MEG executives like McDermitt or Woodward. If Vince Saduski has the skills to run MEG we will never know because he cant operate freely. It is obvious that Kim realizes this also, With the Meredith deal he is buying a management team that includes Paul Karpowitz, who is never mentioned in the headlines, only the CEO Lacy is brought up. Lacy specializes in publishing and interactive, that is why Karpowitz was hired for television. It seams unlikely the MDP deal will materialize now unless MDP reverses and makes a bid for MEG. if that happenst all the substandard executives at MEG will be out, even McDermitt.
As Jerry Seinfeld's girl friend would say, they are real and spectacular. Seriously, the FCC will pay handsomely for the spectrum that Broadcast holds. They wil then sell it off to Mobile carriers at a significant profit to make a small dent in the national debt.
I believe the original MDP deal goes through or Soohyung Kim takes MEG private. The more I read about him the more I believe he has an agenda to build a very large TV group on the order of SBGI. All his efforts to acquire Young and LIN will be for not if he allows NXST in. I am actually leaning toward going private because of the length of time that has passed. Seems to me he is putting together a private equity partnership. This would be better for stockholders than acquiring MDP takeover. There would be countless lawsuites if the MEG board turns down NXST I believe KIM owns about 33% of the company, all he has to do is offer $18 to match the 52 week high.
By the way, if I am completely wrong, and KIM is too busy with Radio Shack, then the recent FCC opening auction bids will demand a higher offer from NXST. No one is saying any of the stations will go for opening bids, but I believe 20 to 50% of opening bid numbers are foreseeable and many may go higher than the Greenhill numbers, depending on the market..
Personally I have a buy in at $7.30. If I hit this price I will probably trade out at about 10. As we get closer to the auction, currently scheduled four months from now A new evaluation will be needed., depending what they are able to part with. Just remember, this auction has been delayed many time before, it could be delayed by the courts or congress.
i love it when someone puts their money where their mouth is. Looks like your up about $28K already in just a few days. You should clear at least about $100K by the time this is settled. Good Luck to you.
Not to counter your point, who knows what will happen in 5 years or more. Couple of points, however. To replace OTA, Localism is very important to congress. With digital TV and broadcasting a mpeg4 signal, broadcasters can provide 4 HD programs in the same bandwidth that is currently used. In a typical mid market that means 2 transmitters using a total of 12 MHz or 2 of the current channels. This is a 75% reduction in spectrum. The FCC must adopt the new ATSC 3.0 standard to accomplish this new efficiency. OTA is still needed to provide local news, local advertising for businesses, emergency communication and national defense information even if it is for only 10% of the homes. For the next 10 to 20 years I would suggest OTA is not going away.
The FCC is paying for this spectrum and then reselling it to mobile carriers, at a presumed hefty profit, because it was developed by broadcasters. There is an old analogy that you can buy land in the desert for $100 an acre. Once you put a hotel on that land it is worth millions, (think Las Vegas). The same is true with spectrum. The frequencies used were developed with millions of dollars of capital investments. That is why you can count on maybe 2 hands the amount of licenses that were not renewed in the past 60 years. The govt. fines stations for indiscretions but rarely uses the nuclear option of denying a station of its license. The spectrum belongs to the people but the broadcasters basically lease the spectrum from the people with an expectation of renewal every 5 years. They pay for this spectrum by producing public service programming, participating in the EAS and EAN systems, local weather warnings and an actual fee to the government that depends on market size.
I believe actual auction revenue will be 10% to 25% of opening bids. It is possible to reach 50% in the most attractive markets. Most stations will go to channel sharing, many with their own duopoly or JSA stations as D2 channels. If they take the channel move option it should not hurt the most attractive markets because distribution OTA is less than 7% in those markets.
Sentiment: Strong Buy
We are up 50% from the low 4 weeks ago. The longer this goes I'm thinking Sungyoung Kim may be looking for a private equity partner as a "white night" to take the company private. Maybe they could offer the $18 to shareholders.
There is one more scenario that could develop. It would be pure speculation on my part. I believe Soohyung Kim has a strategic plan for MEG, if his plan is thwarted, does he have the wherewithal to take the company private and offer the shareholders more than NXST or even MDP, Could he find a private equity group that could help him?
I agree completely, especially the scenario that MDP turns the tables and makes a bid for MEG.The first one to offer share holders $18 to $20 gets the company.
Second largest along with largest independent shareholder will not support the deal. TV Newscheck says sources say MEG will withdraw the bid for MDP.
Look for a new bid from NXST and counter offers from MEG. Knowing that the main single investor likes building out his TV company along with the digital component, I think MEG will counter offer a price that will send NXST away. If NXST goes hostile directly to the shareholders, MEG board will try to convince institutional and hedge fund shareholders that within 18 months MEG will be at $30.
Even worse MEG didn't even officially reject the offer, it simply ignored it, they didn't even respond or engage in any discussions with NXST. One week later they announced the deal with MDP. I was actually OK with the MDP merger agreement on the basis they were buying a better management. I would not have been in favor of the deal if I knew there was a chance of negotiating a deal with NXTR north of $17. When the LIN deal closed the payout was pro-rated to some cash and some shares. No one was able to receive all cash. The shares have declined from $17.70 since the LIN Merger less than 9 months ago, to under $10 after the MDP announcement.. the shareholders want a better deal. At minimum it should be 15% above the 52 week high. That would mean a minimum offer of $20.70. As holder of 15,000 shares most from conversion of LIN stock on December 18, 2014, I have come to the conclusion the the BOD of MEG are incompetent and not acting in the best interest of shareholders.
I suspect the MEG Board will come back with a 25% premium demand over the most recent high $17.70 which would be $22.13. MEG Board will try to convince shareholders that $14.50 is an inferior offer taking advantage of temporary recent lows in the Media sector. I don't think NXST will accept this counter offer and will go hostile with an offer to MEG shareholders at $17 or $18. I believe one way or the other, the Meredith deal will not go forward.
You might have made a good trade. I have to believe that Soohyung Kim will turn down this offer. He is on a mission to build this company to the size of SBGI. He wants 39% (FCC limit) of the country covered. If he accepts Nexstar's offer it will mean Nexstar gets the combined LIN and Media General for a little more than what Media General paid for LIN. In other words it guarantees he will lose over a billion dollars in the course of just over a year. The bid needs to get to, at minimum, $18. $20 will assure a deal, that way everyone makes a little money; Former LIN shareholders, Media General shareholders and Soohyung Kim. Nexstar is taking advantage of the down market and an even worse media sector.
Sorry about the error, I neglected to use the 1.5214 multiplier for MDP shares. The combined company will have as follows: YCharts says there are 127.76 million shares outstanding for MEG. YCharts reports there are 44.62 million shares outstanding for MDP. multiply 44.62 by 1.5214 exchange rate = 67.89 million additional shares. Total = 127.76+67.89=195 million shares. I share your opinion that currently investors do not agree with the stated forward looking FCF estimates, that is why the stock sank to just under $10.00, although it has recently recovered to $11.30. I believe in the forward looking FCF estimates and would actually suggest a slightly higher estimate of the merged company is appropriate. This "cautious optimism" is due to 2016 political, Olympic, and retransmission revenue. CBS set the new benchmark to $2.00 per sub for retransmission. I suspect many of the MDP and MEG stations are still below $1.00. The combined company will have much better negotiating power to close this gap. Lastly, the FCC auction should provide significant "new" one time revenue.
MEG has already declared a combined 2015 and 2016 FCF of $540-$600 million. This was prior to the merger announcement. Since the merger announcement Meredith's CFO has said combined FCF for the two years following the merger will be $1 billion. Meredith Media General will have about 176 million shares outstanding. Doing the math, this should produce a stock price of $20 -$25 by the end of 2016 and $35 by the end of 2017.