The television station group is paying $20 million to acquire the digital services provider. Its products include websites, a digital publishing platform, original and syndicated content, as well as one of the largest digital advertising agencies.
Nexstar Broadcasting Group announced today that it is purchasing Internet Broadcasting Systems Inc., a digital publishing platform and digital agency services provider, for $20 million.
Nexstar said it expects to close the deal later this month.
IB’s clients include media companies such as Hearst Television and Post-Newsweek Stations, both of which have recently renewed their agreements with IB.
Hearst and Post-Newsweek are also the principal owners of IB.
“IB’s leading digital publishing platform adds new IP and digital workflows to our digital platform offerings, allowing us to marry best-of-breed digital media practices from our current operations with those of IB to deliver more fully integrated digital management solutions to IB’s clients and our markets to generate new revenue across multiple digital platforms,” said Tom O’Brien, Nexstar Broadcasting group executive vice president/digital media and chief revenue officer.
“The IB acquisition also marks Nexstar’s entry into the profitable and fast-growing digital agency business. IB currently has a strong client roster and expertise in this business, and with Nexstar currently owning and operating more than 50 web properties, we will be in an ideal position to offer enhanced digital services to our customers as well as more innovative multi-platform marketing solutions for local and national advertisers on-air, online and on mobile devices.”
Nexstar entered the digital platform business in 2012 when it purchased Newport Television and its Inergize digital subsidiary. To what extend IB and Inergize will be integrated is not clear, but sources say that Nexstar intends to keep on the IB executive team led by CEO Elmer Baldwin.
Nexstar said the purchase price for IB represents a mid-5x multiple of pro-forma 2014 EBITDA. In the first year following the closing of the transaction, IB’s operations are expected to expand Nexstar’s digital business portfolio to over $45 million in annual revenues.
Said Nexstar CEO Perry Sook: “By adhering to our disciplined criteria, we are acquiring a profitable digital business at an attractive pro-forma EBITDA multiple. The purchase multiple is consistent with that of Nexstar’s recent station acquisitions and is below that of other recently announced industry transactions.
“Consistent with our long-term strategic objective to identify and execute accretive transactions that build our revenue, scale and operating base, Nexstar intends to continue to focus on digital investments that allow us to further expand the company’s overall digital media business portfolio, capitalize on emerging market trends to maximize multi-platform audiences and revenue opportunities,” Sook added.
Wells Fargo securities analyst Marci Ryvicker and her team liked the deal. “We think this is a nice complement to NXST’s growing digital assets and are pleased to see NXST take a deeper dive into digital as advertisers ask for more compelling digital products. We expect NXST to continue to make digital investments.
“Additionally, we do not believe this is in place of or precludes additional station acquisitions, which we still think is likely to occur in the near future.”