Why Meredith passed on buying McGraw-Hill stations


Meredith Corporation CEO Steve Lacy made no bones in Wednesday’s quarterly conference call about having taken a good, hard look at the four-station McGraw-Hill TV group when an analyst asked about the potential to grow the TV side of Meredith, which is a fraction of the size of its magazine division. So, why did Scripps win the McGraw-Hill bidding, not Meredith?

“We took a very aggressive look at those properties,” Lacy said, and the company came up with a price range from where they would be really excited to acquire the stations to a high end where it would still be a good deal for Meredith shareholders. But, he said, the final multiple was beyond that range. “So we think that that was a pretty heady price . We think there was a lot of work to be done to those businesses and I don’t believe we feel the need to do a bad deal just to do a deal,” Lacy concluded.

“I would only say, if nothing else, we’re very disciplined about the way we look at stations and how we put together the pro forma – and we took a very close look – and we were very aggressive until the very end,” added Paul Karpowicz, President, Meredith Local Media Group. “But as Steve indicated, at a certain point we had developed our range and once it appeared that the deal was going outside of that range we felt it was appropriate to step back.”

That doesn’t mean Meredith isn’t interested in growing its TV holdings. “To the extent that we still have a strong enough portfolio, we’re not in a position where we have to do a deal. I think we can be very opportunistic and make sure that we do the right deal,” Karpowicz told the analysts.

RBR-TVBR observation: Every company we know of says it is disciplined when evaluating potential acquisitions. So, does the price being too high for Meredith mean that Scripps made a bad buy? Not necessarily. The fit, opportunity and other objectives could be quite different for the two companies, so the way they look at the pricing could be quite different. The Scripps folks were pretty happy about the pricing and the tax structure.

We encourage all to “Like” on Facebook and become a Social Media Editor with RBR-TVBR

We urge all to follow http://twitter.com/#!/RBRTVBRjoin the broadcaster social media Voice