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.
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.