In a major TV station deal, Tribune Broadcasting, which already owns 23 TV stations, has agreed to acquire 19 more TV stations for almost $3 billion.
According to the announcement, "Tribune Company and Local TV Holdings, LLC, today jointly announced they have entered into a definitive agreement for Tribune to acquire all of Local TV’s 19 television stations in 16 key markets for $2.725 billion in cash."
The announcement continues, "Upon closing, the acquisition will immediately transform Tribune into the country’s largest commercial TV station owner, with a total of 42 stations from New York to Los Angeles and Miami to Seattle. Importantly, because most of Local TV’s stations are ranked #1 or #2 in revenue share in their respective markets, the transaction will generate significant free cash flow and be immediately accretive to Tribune’s earnings."
Local TV was formed in 2006 by Oak Hill Capital Partners when it purchased nine TV stations that had previously been owned by the New York Times. A year later it added eight stations owned by News Corp. Tribune and Local are no strangers to one another. They have had a broadcast management agreement for the past five years.
Said Tribune CEO Peter Liguori in the announcement, “This is a transformational acquisition for Tribune—it makes us the #1 local TV affiliate group in America, expands the distribution platform for our high-quality video content, and extends the reach of our digital products to new audiences across the country. We couldn’t be more excited about Tribune’s future as America’s leader in creating and distributing original content and local news programming.”
The announcement notes, "Tribune’s broadcast portfolio will increase from 23 to 42 stations, and include 14 CW affiliates, 14 Fox affiliates, 5 CBS affiliates, 3 ABC affiliates, 2 NBC affiliates and 4 independents. Tribune will own 14 stations in the country’s top 20 markets. It will become the #1 Fox affiliate group, expand its position as the #1 CW affiliate group, and add market-leading stations in prime cities such as Denver, Cleveland, St. Louis, Kansas City, Salt Lake City and Milwaukee.
"Tribune anticipates the combination with Local TV will generate more than $100 million in annual run-rate synergies within five years after closing. The transaction will be structured to deliver to Tribune a step-up in the tax basis of the acquired assets. Taking into account Tribune’s estimate of run-rate synergies and the present value of this tax asset, the effective purchase price multiple on a pro forma basis is approximately 7x 2011 and 2012 average EBITDA."