Gray Makes Deals To Sell 9 More Stations
Gray Television said Monday evening that it has agreed to sell nine stations in eight markets to three different buyers, clearing the way for the FCC to approve its $3.6 billion merger with Raycom Media.
With the deals, Gray fulfills its pledged to spin off from the merger 10 stations in nine markets where Gray and Raycom had overlapping stations to comply with the FCC local ownership rules.
Last week, it said it had agreed sell its CBS affiliate WSWG Albany, Ga., to Marquee Broadcasting.
The combined purchase price for all the divestitures is $235.5 million, more than Gray had expected.
The lastest deals:
- Lockwood Broadcasting has agreed to purchase Fox affiliates WTNZ in the Knoxville, Tenn., market (DMA 61), WFXG in Augusta, Ga. (DMA 112), WPGX in Panama City, Fla., (DMA 151) and WDFX in the Dothan, Ala. market (DMA 173).
- The E.W. Scripps has agreed to purchase ABC affiliates KXXV-KRHD in the Waco, Texas, market (DMA 86) and WTXL in Tallahassee, Fla. (DMA 108).
- Tegna is buying CBS affiliate WTOL Toledo, Ohio (DMA 78), and NBC affiliate KWES Odessa-Midland, Texas (DMA 144).
Gray did not break out the prices of the four deals. But, in separate announcements, Scripps said it was $55 million for the Waco and Tallahassee stations and Tegna said it was paying $105 million for those in Toledo and Odessa-Midland.
By divesting television stations in each of the nine overlap markets, Gray said it “ensures that the Gray/Raycom combination will not reduce competition in those local markets and otherwise complies with regulatory requirements. Gray will not have any joint sales, joint retransmission, shared services, or local marketing arrangements with any divested station.
“Additionally, Gray will not hold an option to repurchase any divested station, nor will Gray finance or guarantee any purchaser’s indebtedness. In short, following consummation of the transactions, the divested stations will operate independently of Gray and under the full control of their new owners.”
Scripps CEO Adam Symson said Scripps’ deal adds scale to the group’s local media reach. “Scripps’ acquisition of these two stations is in line with the strategic vision we set out early this year: to strengthen our portfolio of local television stations while delivering value to shareholders,” he said. “In addition to expanding our household reach and deepening our strong relationship with ABC, this transaction expands our political footprint in key battleground states leading up to the 2020 elections.”
Scripps said it will pay cash and will not have to borrow any money. It also said the deal is expected to be accretive to earnings in the first full year that Scripps operates the acquired stations
Tegna CEO Dave Lougee said WTOL and KWES are “strong, leading local media brands, with deep roots in their community. They are an excellent strategic and financial fit with our portfolio.
“As we’ve seen with the results of our recent acquisition of KFMB in San Diego, Tegna has a proven track record of acquiring highly attractive assets that create value for shareholders. We continue to invest in growth and remain well positioned to capitalize on consolidation opportunities that are both strategic and financially prudent.”
Tegna said the transaction, structured as an asset purchase, represents a multiple of 5.0 times expected average 2017-2018 EBITDA, including run rate synergies and net present value tax savings in the high-teen millions (or 5.9 times, prior to tax savings).
Tegna said it expects the transaction to be accretive to EPS in less than a year after close and immediately accretive to free cash flow and will finance it through the use of available cash and borrowing under its existing credit facility.
According to Gray, the proposed divestitures will close concurrently with the closing of the Gray-Raycom transaction, which Gray said it anticipates will occur following the receipt of regulatory and other approvals in the fourth quarter of this year.
Wells Fargo Securities served as financial adviser and Cooley LLP served as legal counsel for Gray in connection with the divestiture process.