Cerberus Capital Management bought the seven stations for $185 million two years ago when the mergers-and-acquisitions business still had steam--and the local-station business appeared to be on firmer ground than it is now.
Cerberus will pay Nexstar a $2 million-a-year management fee, with incentive payments that would come from performance. Nexstar also stands to receive a share of profits from any sale of the stations--a minimum of $10 million if stations are sold over the next three years. The deal goes through in 2012, but provides for one-year renewal options.
Nexstar hired Goldman Sachs hoping to sell itself two years ago, but halted the sale as adverse market conditions emerged. A sale of the Cerberus portfolio would also seem to be an uphill battle.
Nexstar CEO Perry Sook said: "We are confident that the incentive compensation to be derived from this agreement will be significantly additive to the annual management fees, based on our strategies to improve the market position and operating efficiencies of these stations."
CBS sold the stations in order to concentrate on its large-market properties. Included are the CBS affiliate in Austin, Texas, and the CW station in Providence; a duopoly in Salt Lake City (CBS/RTN) and triopoly in West Palm Beach (CW/MyNetworkTV/Azteca America). Nexstar manages 52 stations in 30 small- to-mid-size markets.