EARNINGS CALL

Sook: Nexstar’s Working On Two Deals

"The acquisitions we have pending would get into the relatively low nine-figure amount," the Nexstar CEO told analysts today. One of those pending deals may be for Granite Broadcasting Corp.'s 10 stations, which include an independent in San Francisco (DMA 6) and an unaffiliated in Detroit (DMA 11).

Perry Sook, president-CEO of Nexstar, raised eyebrows and pulse rates during this morning’s earnings conference call with analysts when he mentioned two deals in the pipeline.

When Barry Lucas, Gabelli & Co. analyst, sought to draw Sook out, asking whether the deals were “bigger or smaller than a breadbox,” Sook implied they were bigger, depending on whose breadbox it is.

“The acquisitions we have pending would get into the relatively low nine-figure amount,” he said. “We feel there’s a relatively robust pipeline of non-brokered, non-auction deals.”

One of those pending deals may be for Granite Broadcasting Corp.’s 10 stations, which include an independent in San Francisco (DMA 6) and an unaffiliated in Detroit (DMA 11).

Perhaps more important, it has stations in multiple markets where Nexstar already owns broadcast properties. Those include Fresno, Calif. (DMA 55); Syracuse, N.Y. (DMA 84); Fort Wayne, Ind. (DMA 109); Peoria, Ill. (DMA 116); and Binghamton, N.Y. (DMA 157).

Earlier in the call Sook noted that Nexstar has about $500 million available to make accretive deals without substantially affecting its 4.7-times debt-to cash flow multiple. The Granite stations appear to fit the criteria.

BRAND CONNECTIONS

Moreover, Granite is run by the same management that oversaw Communications Corp. of America. Nexstar acquired CCA’s 19 stations in 10 markets earlier this year for $270 million.

That deal boosted Nexstar’s duopolies to 33. Acquisitions that produce duopolies are a leading criteria in today’s M&A market because, typically, they are immediately accretive and yield synergies that are greater than buying stations in new markets.

There has been some speculation in financial circles that Nexstar itself could be an acquisition target. That appears unlikely, at least for the moment.

The M&A market is likely to remain lively overall, and for Nexstar, for some time, Sook said.

He broke the sector into multiple boxes: “Downstream shuffling of stations; a small group of companies that are on the bubble — should I stay or should I go” — and the remaining dozen or so large companies that could produce what Wells Fargo analyst Marci Ryvicker has characterized as mergers of equals.


Comments (16)

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wendy l kaiser says:

August 7, 2013 at 3:43 pm

However, Nexstar has bee buy KSEE-TV (NBC) from Granite Broadcasting Corp. Go ahead Buy KOFY and WMYD and Fox is Not Happy.

Joanne McDonald says:

August 7, 2013 at 3:45 pm

Media General would be a better fit for the Granite stations. Media General would brings much less overlap than Granite stations going to Nexstar. Media General can have KOFY-San Francisco with or without KRON or KRON goes to NBC with KNTV going to Tribune and WTKR/WGNT, and WGHP going to Media General in a 3 way trade and swap between NBC, Tribune, and Media General, WEEK/WHOI(soon to be Sinclair control)/WAOE-Peoria, WISE/WPTA-Fort Wayne, WMYD- Detroit, KBJR/KDLH-Duluth/Superior, KRII-Chisholm, WBNG-Binghamton, WKBW-Buffalo,and WTVH/WSTM(soon to be Sinclair control)-Syracuse without Nexstar trying to grab those stations. Sinclair and Nexstar actually already exceeded the number of total stations they could own and manage in New York and Illinois with Sinclair, Nexstar, and Granite overlap in Peoria and Syracuse, and Nexstar and Granite overlap in Fort Wayne and Binghamton. Media General can have the advantage of owning WBNG by also acquiring control of WICZ from Brian Brady.

Sean Smith says:

August 7, 2013 at 4:10 pm

No, Media General would NOT be a better fit for the Granite Stations. Media General would NOT bring much less overlap to the Granite stations. Media General has NO interest in KOFY-San Francisco with or without KRON, which is NOT going to NBC, and KNTV would NOT be going to Tribune, and WTKR/WGNT and WGHP NOT going to Media General in a 3 way trade and swap between NBC, Tribune and Media Genral, WEEK/WHOI are already Sinclair control (do your homework, James), WAOE-Peoria, WOSE/WPTA-Fort Wayne, WMYD-Detroit, KBJR/KDLH-Duluth-Superior, KRII-Chisholm, WBNG-Binghamton, WKBW-Buffalo and WTVH/WSTM (they are already Sinclair control—DO YOUR HOMEWORK, JAMES), WITH Nexstar trying to grab those stations. Sinclair and Nexstar actually have NOT exceeded the number of total stations they coulld own and manage in New York and Illinois, with NO Sinclair, Nexstar and Granite overlap in Peoria and Syracuse, and NO Nexstar and Granit overlap in Fort Wayne and Binghamton. Media General would NOT have the advantage of owning WBMG by also acquring control of WICZ from Brian Brady, who is not selling.

    Wagner Pereira says:

    August 7, 2013 at 5:09 pm

    James do homework? That would require actual, well, work!

Jay Miller says:

August 7, 2013 at 4:11 pm

The mediocre just keep trying to get more mediocre don’t they???

Jay Miller says:

August 7, 2013 at 4:13 pm

Granite should not be called a broadcaster… they are a programming distributor with a signal . They destroyed one of the top ABC affiltes in the country ..WKBW in Buffalo

Kelly Orchard says:

August 7, 2013 at 5:02 pm

Always enjoy reading these M&A stories just to see what kind of stupid comments James has to offer. Amazingly, within an hour of each story breaking, he already has it analyzed and always has a ‘smarter’ plan. I bet he just has a wheel that he spins to fill in the blanks of his form-letter responses!

Joe Jaime says:

August 7, 2013 at 7:08 pm

Let Nexstar acquire Granite and spin off SF & Detroit ( both indies) to Kevin O’Brien..the perfect fit.

Teri Keene says:

August 7, 2013 at 7:59 pm

With Detroit in bankruptcy, does anybody want to buy anything in the Motor City right now?

Sean Smith says:

August 7, 2013 at 10:26 pm

Yeah, you’re right about James. Whenever I can, I just go in right behind him, and undo every idiotic suggestion he makes. I think it’s funny to turn all of his stupid suggestions right back around, and put it in the only language he seems to understand. I think he’s a kid who happens to have Wikipedia on his computer.

    Kelly Orchard says:

    August 8, 2013 at 10:13 am

    It’s like reading a text version of a bad decision tree that just runs you in circles until you are crosseyed.

Kevin Frey says:

August 8, 2013 at 10:06 am

As Danny pointed out – a big error in this story is that Nexstar has already purchased the Granite station in Fresno, KSEE, and is consolidating it with KGPE, which Nexstar already owned. The two stations are being moved into KSEE’s building and the news derpartments have already been merged.

Jay Miller says:

August 8, 2013 at 11:04 am

Are the Investment bankers really as dumb as they appear loaning this guy the kind of $$ they are. His stations are without question the worst run operations in every one of their markets. His sales organizations are the television equivalent of FTroop!!!

Jamey Deen says:

August 8, 2013 at 11:33 am

NXST stock is trading around $35/share – not bad for “the worst run operations in every one of their markets!” What’s your stocking going for these days, tjxx – oh, that’s right, you don’t have a stock or even own a station – you probably don’t have a meaningful job in this industry…

Jay Miller says:

August 8, 2013 at 5:52 pm

No I just compete against them everyday and its easy pickings!!! Worst sales organization in the business!Just because a stock is trading at high levels has nothing to do with ratings/revenue or quality programming. Maybe you should study the broadcasting business before you send an ignorant email!


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