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Nexstar Media Buys Tribune Media for $6.4 Billion

December 3, 2018

Nexstar Media and Tribune Media have entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction that is valued at $6.4 billion including the assumption of Tribune Media's outstanding debt. The transaction reflects a 15.5% premium for Tribune Media shareholders based on its closing price on November 30, 2018, and a 45% premium to Tribune Media's closing price on July 16, 2018, the day the FCC Chairman issued a public statement regarding his intention to circulate a Hearing Designation Order for Tribune Media's previously announced transaction with a third party. Tribune Media shareholders will be entitled to additional cash consideration of approximately $0.30 per month if the transaction has not closed by August 31, 2019 (pro-rated for partial months and less an adjustment for any dividends declared on or after September 1, 2019). The transaction has been approved by the boards of directors of both companies and is expected to close late in the third quarter of 2019, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.

Upon closing, the transaction is expected to be immediately accretive to Nexstar's operating results inclusive of expected operating synergies of approximately $160 million in the first year following the completion of the transaction and planned divestitures. The proposed transaction will combine two leading local media companies with complementary national coverage and will reach approximately 39% of U.S. television households pro-forma for anticipated divestitures and reflecting the FCC's UHF discount. The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction from BofA Merrill Lynch, Credit Suisse and Deutsche Bank.

Following the completion of the transaction, Nexstar will benefit from increased operational and geographic diversity and scale as a result of Tribune Media's diverse portfolio of media assets including 42 owned or operated broadcast television stations in major U.S. markets; compelling local news and entertainment content creation; significant broadcast distribution; a reinvigorated general entertainment cable network, WGN America; a 31% ownership stake in TV Food Network, which is a top tier cable asset; and equity investments in several digital media businesses. The combined entity will be one of the nation's leading providers of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms with pro-forma annual revenue of approximately $4.6 billion (2018/2019 average) and pro-forma adjusted EBITDA of approximately $1.7 billion (2018/2019 average). With 216 combined, pre-divestiture full power, owned or serviced, television stations in 118 markets and rapidly growing digital media operations, Nexstar will continue its commitment to localism and innovation and offer superior engagement across all devices, including large-scale reach to U.S. television households and online users.

Perry Sook, Chairman, President and CEO of Nexstar, commented, "Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies. We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today's rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate. As with our past transactions, we have developed a comprehensive regulatory compliance plan and believe we have a clear path to closing. With committed financing and a plan for significant synergy realization that will result in only a minimal increase in Nexstar's pro-forma leverage, the combined entity will be poised for growth, leverage reduction and increased capital returns for shareholders.

"The transaction offers synergies related to the enhanced scale of the combined broadcast and digital media operations, and increases our audience reach by approximately 50%. Furthermore, the addition of the Tribune Media broadcast assets further expands our geographic diversity, as pro forma for the completion of the transaction, we will serve 18 of the nation's top 25 markets and 37 of the top 50 markets.

"Financially, the transaction will result in approximately 46% growth in Nexstar's average annual free cash flow in the 2018/2019 cycle to approximately $900 million, or approximately $19.50 per share, per year based on approximately 46.2 million Nexstar shares outstanding. In the twenty two years since we founded Nexstar, we have demonstrated prudent use of leverage and an ability to source capital at attractive rates to support our strategies for growth and the enhancement of shareholder value. Given our planned divestitures and the significant free cash flow from operations we intend to allocate capital from the combined entity to immediately reduce leverage and increase our return of capital to shareholders, while investing in our business to improve service to viewers and advertisers. This focus, combined with our time proven operating and integration strategies will enable us to extend our strong long-term record of shareholder value creation."

Peter Kern, CEO of Tribune Media, said, "We are delighted to have reached this agreement with Nexstar as it provides Tribune shareholders with substantial value and a well-defined path to closing. Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets. We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers. The premium value our shareholders are receiving reflects the hard work of our dedicated Tribune employees in maximizing the value of our portfolio. I look forward to working closely with the Nexstar team to deliver on the value of this compelling combination and to ensure a smooth transition and integration of our companies."

Thomas Carter, Chief Financial Officer of Nexstar, added, "This accretive transaction marks further progress toward our goal of improving our competitive position by strategically expanding our operating base to realize the benefits of scale, increasing our strategic and financial flexibility, and driving shareholder value. Our long-term experience in integrating acquired assets and our success over the last seven quarters in outperforming our synergy targets and driving other operating efficiencies related to our acquisition of the Media General operations will serve us well as we add the Tribune Media assets to our operating base. With our experienced management team, operating discipline and focused approach to managing our capital structure and cost of capital, we believe the acquisition of Tribune Media presents another meaningful opportunity for Nexstar, the markets we serve and our shareholders. Notably, after giving effect to the transaction, the incurrence of debt, transaction expenses, and the expected first year synergies of $160 million as well as in-process and planned asset sales, we expect our net leverage ratio to be approximately 5.3x at closing and with the free cash flow generated from this base of operations, we expect Nexstar's net leverage to decline to the 4.0x range by the end of 2020, a year which will also benefit from significant 2019 renewals of retransmission consent agreements and the Presidential election."

Completion of the transaction is subject to approval by Tribune's shareholders, as well as customary closing conditions, including approval by the FCC, and satisfaction of antitrust conditions. Nexstar intends to divest certain television stations necessary to comply with regulatory ownership limits and may also divest other assets which it deems to be non-core. All after-tax proceeds from such asset sales are expected to be applied to leverage reduction.

BofA Merrill Lynch is acting as financial advisor and Kirkland & Ellis LLP and Wiley Rein LLP are acting as legal counsel to Nexstar Media in connection with the proposed transaction. Moelis & Company and Guggenheim Securities are acting as financial advisors to Tribune Media and Debevoise & Plimpton LLP and Covington & Burling LLP are acting as its legal counsel.

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