Media General, the TV broadcaster backed by Mario Gabelli and Warren Buffett, rose 34 percent after agreeing to combine with New Young Broadcasting in a stock deal valuing the companies at $870 million.
Media General, owner of 18 TV stations, rose to $9.76 at the close in New York, the biggest one-day gain in more than 19 months. The shares have more than doubled this year.
The merger highlights the hastening consolidation in local TV, driven by the fees stations and broadcast networks are beginning to extract from cable and satellite operators such as Comcast and DirecTV.
Sinclair Broadcast Group has spent more than $1.84 billion in the past two years buying local outlets, expanding its reach to 34 percent of US households.
George L. Mahoney, president and chief executive officer of Media General, will lead the new company, which will keep the Media General name and remain based in Richmond, Va., the company said.
New Young Broadcasting is headquartered in Nashville, Tenn.
Media General will have about 89.1 million shares outstanding once the deal closes, including about 60.2 million issued to Young’s shareholders.