E.W. Scripps Co. and Journal Communications Inc. agreed to merge, combine their broadcasting operations and spin off their newspaper businesses in a new, publicly held company.
Shareholders of Journal Communications will receive 0.5176 share in Scripps for each Journal share owned, according to a statement yesterday. They also will get 0.195 share of Journal Media Group, the new newspaper business, for each Journal share held. The companies have a combined market value of about $1.56 billion today.
The deal creates two companies positioned for transactions in television and publishing industries that are both going through consolidation. E.W. Scripps will have the fifth-largest independent TV station group in the U.S., reaching 18 percent of households, according to the statement. Journal Media, with newspapers in 14 markets, will have no debt.
Near-term cost savings will total about $35 million, as Scripps newspapers in 13 markets are combined with the Milwaukee Journal Sentinel, and Scripps, while remaining controlled by its founding family, operates television and radio stations in 27 markets, up from 21.
Rich Boehne, chairman and chief executive officer of Scripps, will continue in his current role at the broadcasting company. Tim Stautberg, now senior vice president of newspapers for Scripps, will become CEO of Milwaukee-based Journal Media.
Investors in Cincinnati-based Scripps will get 0.25 shares in the publishing company and a special dividend of $60 million, according to the statement. They will own 69 percent of the combined broadcast company and 59 percent of the newspaper group. Scripps will retain control of the Scripps National Spelling Bee.
There have been consolidation and spinoffs in both the television industry and in publishing. Rupert Murdoch separated his entertainment business, now 21st Century Fox Inc., last year while retaining the publishing assets such as the Wall Street Journal at News Corp. Tribune Co. also is cleaving its television operation from print.
Sinclair Broadcast Group Inc. and Gannett Co. have led a recent round of television-station buyouts. Sinclair, based in Hunt Valley, Maryland, is acquiring TV stations owned by the Allbritton family for $985 million, while Gannett bought Belo Corp., another TV station group, for $2.03 billion in December.
Scripps fell 0.5 percent to $19.99 yesterday in New York, before the deal was announced. The shares have declined 8 percent this year, giving the company a market value of $1.12 billion, according to Bloomberg data. Journal Communications added 2.6 percent to $8.76, the most in almost a month. The stock is down 5.9 percent this year.
Wells Fargo served as financial adviser to Scripps, while Evercore Partners advised the Scripps family, according to the statement. Methuselah Advisors gave advice to Journal Communications. BakerHostetler provided advice to Scripps.