The price tag for seven Fox and CW affiliates in four markets — Roanoke, Huntsville, Quad Cities and La Crosse — represents a buyer’s muliple of just 5X, says Nexstar. With the deal, Nexstar’s portfolio swells to 102 stations in 54 markets reaching approximately 15.5% of all U.S. TV homes.
Nexstar Broadcasting Group continued its acquisitive ways, announcing a deal Wednesday to acquire seven stations in four markets from the Grant Co. for $87.5 million.
The stations: WFXR-WWCW Roanoke, Va. (Fox-CW, DMA 66); WZDX Huntsville, Ala. (Fox, DMA 79); KGCW-KLJB Quad Cities, Iowa (CW-Fox, DMA 41) ; and WLAX-WEUX La Crosse, Wis. (Fox-Fox, DMA 128).
With the deal, the portfolio of stations that Nexstar owns or operates increases to 102 in 54 markets reaching approximately 15.5% of all U.S. TV homes.
“The agreement … extends our momentum in building the scale of our broadcast operating base through accretive acquisitions,” said Nexstar CEO Perry Sook in a statement.
“This transaction is consistent with our criteria for acquisitions that are accretive to free cash flow, further strategically diversify our revenue and operating base, create additional duopolies or virtual duopolies and present significant synergies with well-defined paths to realization,” he added.
Upon completing all announced transactions, Nexstar said, it will own or provide services to multiple stations in 36 of the 54 markets in which it will operate.
The purchase price for the seven stations represents a five times multiple of their expected average 2013-14 broadcast cash flow following anticipated operating improvements and synergies identified by Nexstar, the group said.
(According to Nexstar, KLJB is actually being purchased by Nexstar’s duopoly partner, Mission Broadcasting, to comply with the FCC’s local ownership rules barring common ownership of multiple stations in small markets like Quad Cities.)
Wells Fargo media analyst Marci Ryvicker was bullish on the deal, saying it’s “another solid deal that fits nicely with Nexstar’s accretive acquisition strategy. Nexstar enters Virginia and strengthens [its] footprint in Iowa — probably significant political revenue generators. Nexstar will own a duopoly in West Virginia, likely a hot Senate race in 2014 since Jay Rockefeller will not be running for Senate again. Furthermore, Nexstar will own two additional non-Big 4 stations in the swing state of Iowa, which typically generates substantial political revenue in both presidential and non-presidential election years.”
Kalil & Co. represented Grant in the transaction.