Cerberus, the private equity firm that purchased the seven stations in four markets from CBS last year for $185 million, will pay Nexstar $2 million a year to manage them. The deal puts Nexstar into four new markets: Salt Lake City; West Palm Beach, Fla.; Austin, Texas; and Providence, R.I.
Nexstar Broadcasting Group is going into the station management business.
The publicly traded station group announced this morning that it has agreed to manage Four Points Media Group’s seven stations (in four markets) for $2 million a year plus bonuses for boosting cash flow.
Nexstar is guaranteed a minimum of $10 million in fees if the stations are sold within the next three years and a share of equity profits if the stations are sold while the agreement is effect.
Cerberus Capital Management, a private equity firm, formed Four Points when it purchased the seven stations from CBS in January 2008 for $185 million. Longtime broadcaster Dick Reingold had advised Cerberus on the purchased and had been running the stations.
The Four Points stations: KUTV (CBS) and KUSG (RTN) in Salt Lake City (DMA 33); WTVX (CW), WTCN-CA (MNT) and WWHB (Azteca) in West Palm Beach, Fla.(DMA 38); KEYE (CBS) in Austin, Texas (DMA 49); and WLWC (CW) in Providence, R.I. (DMA 52).
Nexstar, which operates stations in markets mostly below the top 50, does not own or operate any other stations in the four Four Point markets. KUTV, the Salt Lake City CBS affiliate, will become the largest station in its portfolio.
Despite a heavy debt load and a sinking stock price, Nexstar has been one of the few broadcasters active in the station trading market of late.
Over the past few months, it has purchased CW affiliate WCWJ Jacksonville, Fla., for $18 million and MNT affiliate KWBF Little Rock, Ark., for $4 million.