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Scripps, Journal Communications Shareholders Approve TV Merger, Print Spinoff

The uncoupling of newspaper and television chains into separate operations continued Wednesday, as shareholders for E.W. Scripps Co. and Journal Communications approved a merger that creates separate TV and print companies.

The twin votes will create a Cincinnati-based Scripps operation of 33 TV stations in mid- and small-markets. The addition of a dozen stations enhances Scripps’ position as one of the nation’s largest owners of ABC affiliates.

The new Scripps company will remain under the voting control of the E.W. Scripps family, which got into the newspaper business 137 years ago. Scripps will have about 4,000 employees, focused in digital and radio operations, as well as TV.

The reborn Journal Media Group will operate in 14 markets with a variety of digital and print publications, including the Ventura County Star and the Milwaukee Journal Sentinel. That newly constructed company will employ about 3,600.

As both publishing and local TV assets have been challenged in recent years by the flight of advertising to digital competitors, a number of companies, including News Corp, have moved to peel off TV operations that generally are seen as having a greater upside.

A transaction structure conceived by New York-based Methuselah Advisors differs sharply from previous publishing spinoffs – including those involving Tribune and Time Warner – in which publishing units took on substantial debt.

Shareholders and operators of the new Scripps television company are said to be pleased because they can promote a pure digital and TV play. Journal Media principals like the transaction because it leaves them with a debt-free balance sheet, buoyed by a $10 million cash infusion.

The merger, announced in July, will pay a $60 million dividend to shareholders of Scripps.

Wells Fargo Securities advised Scripps, while Evercore Partners provided financial advice to the Scripps family, with Methuselah Advisors and its managing partner, John Chachas, advising Journal Communications.

E.W. Scripps (SSP) stock has increased more than $4 (to a $24.12 close Wednesday) since the transaction was announced July 30. Shares of Journal Communications (JRN) jumped 42% over the same time frame, closing Wednesday at $12.40. The deal is expected to close in early April.

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