Gannett Co. has announced that it will buy station owner Belo Corp. for $1.5 billion, a move that would create the fourth-largest owner of major network affiliates in the U.S., Reuters reports.
The buyout would provide faster-growing TV assets for Gannett, helping to offset the company’s newspaper businesses, the piece notes. Gannett is the largest U.S. newspaper chain.
The deal would almost double Gannett’s broadcast holdings, creating a portfolio of network affiliates reaching almost one-third of the U.S. market, Gannett said today.
“Gannett’s $13.75-per-share offer represents a 28 percent premium to Belo’s close on Wednesday. Shares in both companies soared in early trading, with Gannett hitting a five-year high,” Reuters reports. “If the transaction is approved, Gannett’s broadcast segment would contribute more than half of the company’s pro-forma earnings before interest, tax, depreciation and amortization.”
Gannett CEO Gracia Martore said the buyout would give Gannett a "more favorable balance," with more emphasis on higher-growth assets. She added: "I think what we have is tremendous financial flexibility. We have a balance sheet that is actually even financially stronger today."
The report adds: “Gannett said it would generate significant free cash flow and increase its operating earnings per share by about 50 cents in the first year. It will also result in some $175 million of annual savings within three years after closing.”
Belo owns 20 TV stations, including nine in the top 25 markets, the piece notes.
The report adds: “The deal, which is expected to close by the end of this year, will need antitrust approval, Federal Communications Commission (FCC) approval, and approval by holders of two-thirds of Belo shares, Gannett said.”