Media General said Friday that it would acquire LIN Media, the owner of KHON-TV in Honolulu and its neighbor island sister stations, for $1.6 billion in a cash-and-stock deal that will create the second-largest local television broadcasting company.

LIN Media shareholders will receive about $27.82 a share, about a 28 percent premium.

Both Media General and LIN Media operate local television stations that act as affiliates to the big broadcast networks like ABC, CBS and NBC.

The combined company will own 74 stations in 46 markets and reach 26.5 million households, or 23 percent of the U.S. market. It will rank behind only Sinclair Broadcast Group in terms of number of stations operated. LIN purchased the Hawaii stations from New Vision Television in May 2012.

LIN Media shares jumped 22.5 percent, or $4.83, to $26.32 on Friday, while Media General shares were up 0.6 percent, or 10 cents, to $17.44.

This is the first local broadcasting deal announced since Comcast agreed to acquire Time Warner Cable, creating the largest cable operator in the country.

If completed, that deal could put pressure on local television groups like Media General and LIN, which are paid by cable operators for the right to carry their local stations.

Analysts predicted that local network groups like Media General and LIN Media might consolidate to have more leverage at the bargaining table.

The chief executive of LIN Media, Vincent L. Sadusky, will lead the combined group, which will be called Media General.

"The merger of two highly respected broadcasters with superior television and digital assets creates maximum value for shareholders and provides us the scale, breadth and resources to compete more effectively in the rapidly evolving media landscape," Sadusky said. "Together, we will be able to better serve our local communities throughout our significant and diverse geographic footprint and further grow our national digital business."

The merger agreement includes a one-month go-shop period, during which LIN Media can open its books to other interested parties. If a new buyer emerges during that time, it would only have to pay a 1.625 percent break fee, or $26.6 million, if it makes a bid by May 15.

If a buyer emerges after May 15, the break fee would double.

Star-Advertiser reporter Erika Engle contributed to this story.

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