A Hearst Corp. representative declined comment about whether the increase would affect the bid. Hearst Corp. is the station group's majority owner, with about 73% of the voting power. Despite turmoil in the credit markets, Hearst Corp. said it has the finances in place to proceed with the transaction starting early next month.
H-A's stock price hit a 52-week low on July 26, having fallen nearly $10 a share since mid-April. Revenues for 2006 were up 11% to $785.4 million, with operating income at $228.8 million.
"The competitive demands of the TV broadcasting industry and changes in the broader media industry, when balanced against the pressures on a public company to deliver short-term results, have convinced us that private ownership of Hearst-Argyle is desirable and will assist Hearst-Argyle in attaining its strategic and business objectives," wrote Hearst Corp. CEO Victor Ganzi in a letter to the H-A board.
In recent months on conference calls, investors have asked H-A CEO David Barrett, who sits on the Hearst Corp. board, whether the parent company would look to take the station group private. Barrett declined comment.
Hearst Corp. makes the move in advance of a potential flood of political dollars running from now through January. (Its portfolio includes stations in Iowa and New Hampshire.) At the same time, the future of the traditional station business is uncertain in the face of Internet competition. Still, the company has steeled itself for changes by being aggressive in the new-media space--acquiring a stake in Internet Broadcasting, which develops Web sites for TV stations, as far back as 1999 and recently launching a partnership with YouTube and a high school sports venture.
The company was formed 10 years ago this month via the combination of Hearst's broadcast operations and Argyle Television's. It manages 29 stations--including 12 affiliated with ABC and 10 with NBC--covering 18% of the country. The portfolio includes stations in Boston, Baltimore and Pittsburgh and duopolies in Orlando, Kansas City and Sacramento.
While Hearst said it has the financial backing to proceed, tremors in the credit markets have prompted at least one station group, Nexstar, to pull itself off the market recently and slowed down the process at LIN TV. Other station groups apparently continue to move forward--including News Corp. with nine stations on sale, Univision and Acme Communications.