What's going on?

American telecommunications company Nexstar Media Group agreed to buy broadcaster Tribune Media on Monday for just over $4 billion � and both companies tuned in to see their stock prices rising.

What does this mean?

Nexstar is the second-biggest local television company in the US � but Tribune�s 42 stations would push it firmly into the number one spot, with a combined stable of some 200 Ws and Ks (tweet this). The combined company would reach around 39% of US household TVs, with Tribune�s stations helping Nexstar expand geographically and gain footholds in major markets like New York and Los Angeles.


Nexstar�s main rival, Sinclair Broadcast Group, tried to snag Tribune for itself earlier this year � but the deal fell apart after Sinclair failed to get regulators onside. The Nexstar-Tribune deal is similarly subject to regulatory approval, but Nexstar expects it to sail through.

Why should I care?

For markets: A tribute to Tribune.

Tribune�s stock rose by 11% on Monday, and Nexstar�s by 5%. As is typical when one company buys another, Nexstar�s paying a premium for Tribune: just over 15% more than it was worth on Friday. Investors betting on the deal going through bought Tribune�s stock � but the gap between its current valuation and what Nexstar is paying reflects the possibility that this deal also gets blocked by regulators. Nexstar�s shareholders seemed optimistic: following a record-breaking year for political ad sales (which may have helped make Nexstar itself a potential takeover target), the added clout of Tribune�s stations would likely put it in a stronger position to negotiate future purchases of TV shows from other networks.

The bigger picture: Deal and no deal.

TV marriages haven�t done so well lately: along with the Sinclair-Tribune disappointment, a proposed merger between US broadcasters CBS and Viacom also fell through. But more deals are on the cards: Sinclair is looking to bid for 21st Century Fox�s regional sports networks, which the media giant is selling as part of its merger with Disney.