The $212 million that Scripps agreed to pay McGraw-Hill for its station group justifies higher valuations for other stations groups like Belo and Sinclair, says Wells Fargo analyst Marci Ryvicker.
Ryvicker: Scripps Buy Good For Broadcasting
The price that Scripps is paying for the McGraw-Hill TV station group — $212 million or 8x 2012 EBITDA including tax benefits — is “positive” news for the TV broadcasting industry and “should provide significant valuation support” for other station groups, says Marci Ryvicker, a Wells Fargo equity analyst in a note to clients today.
Belo and Sinclair Broadcast Group are currently trading at 5.6x and 6.2x blended estimated 2011-2012 EV/EBITDA, respectively, her note says. Applying an 8x multiple to these two companies would result in stock valuations of approximately $9.50 (+113%) for Belo and $12.75 for Sinclair (+83%).
As of this posting (about 11:30 a.m. ET), Belo was up 3.15% to $4.59, while Sinclair rose 4.17% to $7.24. For its troubles, Scripps stock was down 2.23% to $6.59.
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