Media General/Meredith Likely to Get Antitrust OK
Media General is likely to receive federal antitrust approval for its proposed $2.4 billion purchase of Meredith, attorneys who follow broadcast transactions and former Department of Justice officials told us. Though it’s not known whether DOJ or the FTC would review the deal, several recent media deals have gone to DOJ, including Media General’s buy of LIN Media last year. Media General’s familiarity with the process from the LIN deal and its upfront plan to divest stations in overlapping markets suggest it’s confident the Meredith deal will survive scrutiny, said Fletcher Heald broadcast attorney Dan Kirkpatrick. FCC OK also is expected (see 1509080061).
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It’s likely that Media General floated the deal proposal by federal regulators before publicly announcing it, industry officials told us. “Parties are free to go into DOJ at any point in time” to discuss potential deals, said Konkurrenz Group attorney Allen Grunes, formerly of Justice's Antitrust Division. It’s prudent in deals for parties to be proactive in suggesting where competitive problems may be and also be proactive in suggesting remedies, Grunes said. If competitive problems come out later in the process, it can look like the companies are hiding something, he said. Media General and Meredith announced plans to divest or swap stations in six overlapping markets at the same time they announced the transaction.
Federal regulators will likely look at the deal in terms of its impact on programming and the advertising markets in the areas covered by the new company, Grunes said. Since the new company -- to be called Meredith Media General -- will reach 30 percent of U.S. households under the terms of the deal, Grunes said it's possible regulators could look at its impact on markets on the national scale, or at its impact in the online video market. DOJ is “attuned to changes in the marketplace,” Grunes said. With online video becoming more important, it’s not clear that “earlier market definitions still hold,” he said.
The deal is likely a reaction to consolidation in the multichannel video programming distributor and online video industries, analysts said. “Meredith Media General is the latest sign of the need for scale that has characterized the last several years of the TV station business,” emailed SNL Kagan's Robin Flynn in a blast. By getting larger, the new company should see advantages in retransmission consent negotiations, Flynn said. “The potential larger scale entry of major companies such as Apple and Sony in the virtual MSO [multiple system operator] space makes it more important for station owners to have scale to better navigate negotiations with these emerging national video providers.” It should also allow Meredith Media General to capitalize on the expected high political ad revenue of the upcoming presidential campaign, said Flynn. “Expanded national presence” offers “a larger platform for national buyers.”