DMAS 12 & 21

Meredith Buying Three Stations From Gannett

For $407.5 million, Meredith is getting KMOV St. Louis and KTVK-KASW Phoenix that Gannett is acquiring in its purchase of Belo Corp.

Meredith is buying television stations in Phoenix and in St. Louis from Gannett Co. and Sander Media LLC for $407.5 million in cash, it was announced this morning.

The stations are among those Gannett is acquiring from Belo Corp.They are being spun off to comply with FCC and Justice Department requirements.

As part of the sale, Gannett sidecar company Sander Media will sell CBS affiliate KMOV St. Louis (DMA 21), which Sander Media will acquire upon close of the Gannett-Belo transaction. In addition, Gannett will convey certain other assets that are needed to provide services to KMOV, which Gannett will acquire from Belo upon close of the Gannett-Belo transaction.

Gannett said the sale to Meredith, upon government approval, “will satisfy Gannett’s and Sander Media’s obligations under the previously announced proposed consent decree with the U.S. Department of Justice in connection with Gannett’s acquisition of Belo.”

Under a separate agreement, independent KTVK and CW affiliate KASW Phoenix (DMA 12), will be sold to Meredith. At the closing, Meredith will convey KASW to SagamoreHill, which, through its affiliates, owns and operates two television stations in two markets.Meredith will provide certain services for the operation of KASW pursuant to a customary services agreement with SagamoreHill in accordance with Federal Communications Commission local television ownership rules.”

Gracia Martore, president-CEO of Gannett, said: “We are very pleased to have reached this agreement with Meredith. Meredith is a highly respected multi-media company which shares our commitment to outstanding local journalism, and we are confident that these stations will be in good hands. We are also pleased to have reached an agreement with attractive terms for our shareholders, as these sales will significantly lower the effective purchase price for Belo while reducing only minimally the expected synergies associated with the Belo transaction, which we expect to close promptly.”

BRAND CONNECTIONS

Gannett said the sale of these stations “is expected to have an impact of less than $2 million on Gannett’s previously disclosed projected annual run-rate synergies of $175 million within three years of closing of the Belo transaction. Gannett’s pending acquisition of Belo and the sale of these stations to Meredith together are expected to generate significant free cash flow and be accretive to non-GAAP earnings per share by approximately $0.43 in 2014.”

The company added that it expects to use the proceeds of the sale to reduce debt and for other purposes consistent with Gannett’s stated capital allocation strategy. Gannett still owns stations in both markets — KSDK St. Louis (NBC) and KPNX Phoenix (NBC).

Meredith chairman-CEO Stephen M. Lacy said: “These acquisitions are consistent with our successful Total Shareholder Return strategy and will be immediately accretive to earnings, excluding upfront transaction costs. These are high-performing stations and will add to our already strong cash flow. We will increase our presence in the large and growing Phoenix market, where we own KPHO, the CBS affiliate. KMOV (CBS) in St. Louis adds another Top 25 market to our portfolio, and when combined with KCTV (CBS) in Kansas City, gives us powerful local brands in two of the Midwest’s top news and sports markets.”

Meredith said that in the first full year after closing, “the stations are expected to generate combined revenues of $105 million to $115 million, and be accretive to run-rate earnings per share by $0.16 to $0.18. The transactions will be structured to deliver a step-up in the tax basis of the acquired assets.  Including the present value of this tax benefit, and estimated annual synergies, the pro forma purchase price multiple is approximately 8x estimated average 2012 and 2013 EBITDA.”

Meredith said it intends to finance the transactions with new bank and private placement financing and expects the deals to close during the first half of calendar year 2014.


Comments (5)

Leave a Reply

Joanne McDonald says:

December 23, 2013 at 3:37 pm

I feel Scripps would’ve love to acquire KTVK to have the station affiliated with the ABC network while turning KNXV has a true independent station as a way for Scripps to both use KTVK and KNXV for expanded newscasts on both stations in Phoenix. Scripps would’ve also love to acquire WHAS to be more hands on with operations since WHAS in Louisville is close to E W Scripps headquarters in Cincinnati. Gannett can get involved in a trading and swapping deal with SInclair in which KSMB and KTTU goes to Sinclair while WUCW and WTTA also with the option to gain KDNL and WTVZ from Sinclair going to Gannett. KGW can can connected with Gannett under Sander due to KGW having close bonds with long time sister station KING and KONG.

Alan Whitney says:

December 23, 2013 at 3:38 pm

huh?

Sean Smith says:

December 23, 2013 at 4:17 pm

Not to worry. Whenever station ownerships change hands, Cielhola jumps on here with stupid, ridiculous scenarios that will never happen.
He does not understand how ownership transfers work, so he just makes something up.

Bill Vernon says:

December 23, 2013 at 8:33 pm

phxguy: best advice given is, Just ignore Cieloha’s plethora of lectures on station swapping and/or selling stations. its not going to happen!

Just Fine says:

December 24, 2013 at 12:37 am

The Gannett/Meredith deal makes more sense tand feels a lot less shady han the arrangement Tribune has with Dreamcatcher. Dreamcatcher, a unit owned by a former Tribune head, buys a trio of former LocalTV nets for about $28 million for the trio to appease fed laws, but Tribune still manages the networks and has an option to buy later on? And nobody bats an eye? At least there’s an actual change of ownership with Meredith actually buying, owning, and managing the former Belo nets, plus Meredith enters the St. Louis market.


More News