remarkable pace of consolidation in the local station business headlined by Sinclair, Gannett -- the largest newspaper chain in the U.S. -- is making a big bet on the sector’s growth. The
company has a $2.2 billion deal to acquire the Belo group, giving Gannett a much larger TV presence.
The agreement, which has been approved by both companies’ boards, has Gannett
paying Belo shareholders $13.75 a share, a 28% premium on the June 12 closing price.
The deal for Dallas-based TV group is for $1.5 billion in cash -- also assumes $715 million in debt --
making the entire deal value around $2.2 billion. Gannett will now be the fourth-largest U.S. owner of major network affiliates, reaching nearly one-third of U.S. homes, the McLean, Virginia-based
Belo owns and operates 20 television stations, with nine in the top 25 markets, and their associated Web sites. Now Gannett will have 21 stations in the top 25. Plus, it will
become the largest CBS affiliate group and expand as the largest NBC affiliate group. It will have the fourth-largest ABC affiliate group.
The deal would lift Gannett’s EBITDA, by one
measure, to more than 50% of its businesses, which include USA Today
and a large newspaper portfolio. That works out to a multiple of 9.4 times Belo’s 2011/2012 EBITDA before synergies,
The Belo portfolio includes the CBS station in Houston, ABC affiliate in Dallas and NBC outlets in Seattle and Portland. Gannett has the NBC affiliate in Atlanta and CBS
station in Washington. With the deal, Gannett could end up with a triopoly in Phoenix, as its NBC stations would join Belo’s CW outlet and an independent station. It would create an NBC-CBS
duopoly in St. Louis.
Belo split from its newspaper operations in 2008, so the deal with Gannett reconnects it with a large portfolio there.
Gracia Martore, Gannett CEO, stated
that the deal bolsters its portfolio with “a geographically diverse and network-balanced” group, while suggesting it will further help Gannett’s emphasis on building its digital
Gannett currently derives most of its revenues from print -- some 82 newspapers in the U.S. In addition to USA Today
, some bigger-market newspapers include
Detroit Free Press
and The Courier-Journal
in Louisville, Ky.
The cash price for the deal came from an offering $13.75 for Belo’s stock. The Thursday stock market
appeared to praise the deal -- with Belo’s stock price up nearly 27% to $13.65 and Gannett’s stock 23% higher to $24.38.
Recently, the market for TV stations has been active
with a number of bigger TV groups involved including Sinclair Broadcast Group, Fisher Communications, and Cox Media.
The deal will need to clear antitrust regulators, as well as Federal
Communications Commission approval, with a thumbs up for the deal from Belo shareholders. Public interest group Free Press objected on grounds the station business is moving toward too much
consolidation, and Gannett would own both stations in Louisville and Phoenix.