Transaction will create two focused public companies, one built upon
TV, the other newspapers
- The spinoffs and mergers create two industry-focused companies
positioned for success.
- The E.W. Scripps Company, based in Cincinnati, will own and operate
television and radio stations serving 27 markets and reaching 18
percent of U.S. television households. Scripps will be the
fifth-largest independent TV group in the country.
- Journal Media Group, a newly formed newspaper publishing entity,
will be headquartered in Milwaukee and operate in 14 markets.
- Scripps shareholders will own 69 percent of the combined
broadcasting company and 59 percent of the newly formed Journal Media
Group. Journal Communications shareholders will own 31 percent and 41
percent, respectively, of Scripps and Journal Media Group. Scripps
shareholders also will receive a $60 million special cash dividend as
part of the deal.
- With strong balance sheets, both public companies will be well
positioned to make further investments and acquisitions with expected
net leverage of about 2x at closing for Scripps and no debt at Journal
Media Group.
- The transaction is expected to generate about $35 million in
combined synergies, resulting in substantial long-term cost savings,
and create long-term value for shareholders.
CINCINNATI & MILWAUKEE -- (Business Wire)
The E.W. Scripps Company (NYSE: SSP) and Journal Communications (NYSE:
JRN) have agreed to merge their broadcast operations and spin off and
then merge their newspapers, creating two focused and separately traded
public companies that offer long-term opportunities to create value for
shareholders.
The merged broadcast and digital media company, based in Cincinnati,
will retain The E.W. Scripps Company name, and the Scripps family
shareholders will continue to have voting control. The company will have
approximately 4,000 employees across its television, radio and digital
media operations and is expected to have annual revenue of more than
$800 million.
The newspaper company will be called Journal Media Group and will
combine Scripps’ daily newspapers, community publications and related
digital products in 13 markets with Journal Communications’ Milwaukee
Journal Sentinel, Wisconsin community publications and affiliated
digital products. The company, with expected annual revenue of more than
$500 million and approximately 3,600 employees, will be headquartered in
Milwaukee.
The Scripps and Journal Communications boards of directors have approved
the stock-for-stock transactions, which are subject to customary
regulatory and shareholder approvals.
The deal is expected to close in 2015.
“In one motion, we’re creating an industry-leading local television
company and a financially flexible newspaper company with the capacity
and vision to help lead the evolution of their respective industries,”
said Rich Boehne, chairman, president and CEO of The E.W. Scripps
Company, who will continue at the helm of Scripps. “Making the
combinations even more appealing are the rich histories of these two
organizations, both driven by a deep commitment to public service
through enterprise journalism. For shareholders, this deal should unlock
significant value as both companies gain efficiency, scale and more
focus on the industry dynamics unique to these businesses.”
“This transaction will create two solid media businesses that will
continue to serve their communities with a commitment to integrity and
excellence that has been built over many years,” said Steven J. Smith,
chairman and CEO of Journal Communications. “Journal’s radio and
television stations will add depth and breadth to the Scripps TV group
and additional expertise to its management team. The formation of the
new Journal Media Group, headquartered in Milwaukee, will continue a
tradition of exceptional print and digital journalism in 14 markets
across the country. These companies will offer a combination of
excellent local media assets and an incredible array of talent in our
employees. We look to the future with great optimism and a continued
sense of purpose in providing relevant, differentiated content to our
local communities across the country.”
Journal Communications’ Class A and Class B shareholders will receive
0.5176 Scripps Class A Common shares and 0.1950 shares in Journal Media
Group for each Journal Communications share. Scripps shareholders will
receive 0.2500 shares in Journal Media Group for each Class A Common
Share and each Common Voting Share they hold in Scripps.
Journal Communications shareholders will own approximately 31 percent of
The E.W. Scripps Company’s total shares following the merger. Scripps
shareholders will retain approximately 69 percent ownership. The Scripps
family will retain its controlling interest in The E.W. Scripps Company
through its ownership of Common Voting shares. Scripps shareholders will
own 59 percent of the new newspaper company, Journal Media Group, and
Journal Communications shareholders will own 41 percent. Journal Media
Group will have one class of stock and no controlling shareholder.
Scripps shareholders of record just prior to the closing will receive a
$60 million special dividend.
The transaction is expected to be tax-free to shareholders of both
companies.
The companies project about $35 million in combined transaction
synergies in the near term.
Benefits for Scripps
The merger will create significant strategic and financial benefits for
Scripps including:
-
Creating the opportunity for improving TV division margins;
-
Adding a profitable radio business;
-
Positioning the TV group in attractive markets across the country,
including stations in eight important political states – Arizona,
Colorado, Florida, Michigan, Missouri, Nevada, Ohio and Wisconsin;
-
Extending Scripps’ position as one of the largest owners of
ABC-affiliated TV stations in the country by market reach, with 15 ABC
affiliates, and expanding its affiliations to all of the Big Four
networks;
-
Benefitting from co-ownership of TV and radio in five markets;
-
Leveraging high-quality journalism and Scripps’ original television
programming across a larger geographic footprint; and
-
Maintaining a strong balance sheet, with expected net leverage at
closing estimated at about 2x, allowing plenty of capacity for
additional acquisitions.
The combination further leverages Scripps’ digital investments, adding
large and attractive markets to the portfolio. The company is building
and launching market-leading digital brands that serve growing digital
media audiences in addition to supporting its on-air local news brands.
It also recently acquired digital brands with national reach such as
Newsy and DecodeDC that will benefit from the new geographic markets.
The Scripps National Spelling Bee will remain under the stewardship of
The E.W. Scripps Company.
Benefits for Journal Media Group
The spinoff will create significant strategic and financial benefits for
the combined newspaper operations, including:
-
Creating a powerful source of enterprise journalism and the
opportunity for innovation in the industry;
-
Building upon a geographically diverse portfolio of strong local media
brands in 14 attractive markets, including Naples, Fla.; Florida’s
Treasure Coast; Knoxville; Memphis; and Milwaukee;
-
Leveraging best practices of each company across all functions to
drive revenue growth, efficiency and cost effectiveness;
-
Increasing scale and financial flexibility, allowing Journal Media
Group to navigate the ongoing transformation of the local media
landscape; and
-
Establishing a solid balance sheet with $10 million of cash and no
debt (Scripps is keeping substantially all qualified pension
obligations).
Tim Stautberg, senior vice president, newspapers for Scripps, will
become president, CEO and a director of Journal Media Group upon
completion of the transaction. Steve Smith will become non-executive
chairman of the board.
Wells Fargo Securities acted as exclusive financial advisor to Scripps,
Evercore Partners acted as exclusive financial advisor to the Scripps
family, and Methuselah Advisors acted as exclusive financial advisor to
Journal Communications.
Conference call
Scripps and Journal senior managers will discuss the merger and spinoff
with investors and analysts during a telephone conference call today at
9 a.m. (Eastern). To access a live audio webcast of the call, visit www.scripps.com,
choose “Investor Information” then follow the link in the “Calendar”
section.
During the call, managers will refer to a PowerPoint presentation with
details of the deal. That presentation can be found at www.scripps.com
or www.journalcommunications.com.
To access the conference call by telephone, dial (800) 288-8974 (U.S.)
or (612) 332-0632 (International), approximately 10 minutes before the
start of the call. Callers will need the name of the call (“Scripps
call”) to be granted access. Callers also will be asked to provide their
name and company affiliation. The media and general public are provided
access to the conference call on a listen-only basis.
A replay line will be open from 11 a.m. today until 11:59 p.m. Thursday,
Aug. 7. The domestic number to access the replay is 1-800-475-6701 and
the international number is 1-320-365-3844. The access code for both
numbers is 333280.
A replay of the conference call will be archived and available online
for an extended period of time following the call. To access the audio
replay, visit www.scripps.com
approximately four hours after the call, choose “Investor Information”
then follow the “Audio Archives” link at the top of the page.
About Scripps
The E.W. Scripps Company (www.scripps.com)
serves audiences and businesses through a growing portfolio of
television, print and digital media brands. Scripps owns 21 local
television stations as well as daily newspapers in 13 markets across the
United States. It also runs an expanding collection of local and
national digital journalism and information businesses including online
multi-source video news provider Newsy.
Scripps also produces television programming, runs an award-winning
investigative reporting newsroom in Washington, D.C., and serves as the
long-time steward of one of the nation’s longest-running and most
successful educational programs, Scripps National Spelling Bee. Founded
in 1879, Scripps is focused on the stories of tomorrow.
About Journal
Journal Communications, Inc. headquartered in Milwaukee, Wisconsin, is a
diversified media company with operations in television and radio
broadcasting, publishing and digital media. Journal owns and operates or
provides services to 14 television stations and 35 radio stations in 11
states. In addition, Journal publishes the Milwaukee Journal Sentinel,
which serves as the only major daily newspaper for the metro-Milwaukee
area, and several community newspapers in Wisconsin. In support of its
strong local broadcasting and publishing brands, Journal operates a
growing portfolio of digital media assets, from websites to apps to
mobile products, that allow viewers, listeners and readers to access
Journal’s original content anytime and from any device. Learn more at www.journalcommunications.com.
Additional Information and Where to Find It
The proposed transactions involving Scripps and Journal will be
submitted to the holders of Common Voting shares of Scripps and to the
holders of Class A and Class B common stock of Journal for their
consideration. In connection with the proposed transactions, Scripps
will prepare a registration statement on Form S-4 that will include a
joint proxy statement/prospectus to be filed with the Securities and
Exchange Commission (the “SEC”), and each of Scripps and Journal will
mail the joint proxy statement/prospectus to their respective
shareholders and file other documents regarding the proposed
transactions with the SEC. Scripps and Journal urge investors and
shareholders to read the joint proxy statement/prospectus when it
becomes available, as well as other documents filed with the SEC,
because they will contain important information. Investors and
shareholders will be able to obtain the registration statement
containing the joint proxy statement/prospectus and other documents free
of charge at the SEC’s web site, http://www.sec.gov,
from Scripps Investor Relations, Carolyn Micheli, at Carolyn.micheli@scripps.com
or 513-977-3732, or from Journalat Jason Graham, Senior Vice
President of Finance and Chief Financial Officer, at 414-224-2884 or jgraham@jrn.com.
Forward-Looking Statements
This communication contains certain forward-looking statements with
respect to the financial condition, results of operations and business
of Scripps and Journal and the combined businesses of Journal and
Scripps and certain plans and objectives of Scripps and Journal with
respect thereto, including the expected benefits of the proposed spin
and merger transactions. These forward-looking statements can be
identified by the fact that they do not relate only to historical or
current facts. Forward-looking statements often use words such as
“anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”,
“believe”, “hope”, “aim”, “continue”, “will”, “may”, “would”, “could” or
“should” or other words of similar meaning or the negative thereof.
There are several factors which could cause actual plans and results to
differ materially from those expressed or implied in forward-looking
statements. Such factors include, but are not limited to, the expected
closing date of the proposed transactions; the possibility that the
expected synergies and value creation from the proposed transactions
will not be realized, or will not be realized within the expected time
period; the risk that the businesses will not be integrated
successfully; disruption from the proposed transactions making it more
difficult to maintain business and operational relationships; the risk
that unexpected costs will be incurred; changes in economic conditions,
political conditions, licensing requirements and tax matters; and the
possibility that the proposed transactions do not close, including, but
not limited to, due to the failure to satisfy the closing conditions.
These forward-looking statements are based on numerous assumptions and
assessments made by Scripps and/or Journal in light of their experience
and perception of historical trends, current conditions, business
strategies, operating environment, future developments and other factors
that each party believes appropriate. By their nature, forward-looking
statements involve known and unknown risks and uncertainties because
they relate to events and depend on circumstances that will occur in the
future. The factors described in the context of such forward-looking
statements in this communication could cause actual results, performance
or achievements, industry results and developments to differ materially
from those expressed in or implied by such forward-looking statements.
Although it is believed that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given
that such expectations will prove to have been correct and persons
reading this communication are therefore cautioned not to place undue
reliance on these forward-looking statements which speak only as at the
date of this communication. Neither Scripps nor Journal assumes any
obligation to update the information contained in this communication
(whether as a result of new information, future events or otherwise),
except as required by applicable law. A further list and description of
risks and uncertainties at Scripps can be found in Scripps’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2013 and in
its reports filed on Form 10-Q and Form 8-K. A further list and
description of risks and uncertainties at Journal can be found in
Journal’s Annual Report on Form 10-K for the fiscal year ended December
29, 2013 and in its reports filed on Form 10-Q and Form 8-K.
Participants in Solicitation
Scripps, Journal and certain of their respective directors and executive
officers and other members of management and employees may be deemed to
be participants in the solicitation of proxies in connection with the
proposed transactions under the rules of the SEC. Information regarding
the persons who may, under the rules of the SEC, be deemed participants
in the solicitation of proxies in connection with the proposed
transactions will be set forth in the joint proxy statement/prospectus
when it is filed with the SEC. You can find information about Scripps’s
directors and executive officers in its Annual Report for the year ended
December 31, 2013 on Form 10-K filed with the SEC on March 4, 2014 and
the definitive proxy statement relating to its 2014 Annual Meeting of
Shareholders filed with the SEC on March 21, 2014. You can find
information about Journal’s directors and executive officers in its
Annual Report for the year ended December 29, 2013 on Form 10-K filed
with the SEC on March 10, 2014 and the definitive proxy statement
relating to its 2014 Annual Meeting of Shareholders filed with the SEC
on March 21, 2014. These documents can be obtained free of charge from
the sources indicated above.
Non-Solicitation
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as amended. This
communication is not a solicitation of a proxy from any investor or
shareholder.
Contacts:
The E.W. Scripps Company
Carolyn Micheli, 513-977-3732
carolyn.micheli@scripps.com
or
Journal
Communications
Laurel Jahn, 414-224-2059
ljahn@jrn.com
Source: Journal Communications
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