Buyer of nine-station TV group is Oak Hill Capital Partners, private equity firm founded by billionaire investor Robert M. Bass. One broker not involved in the deal pegs the cash-flow multiple at 12.7.
The New York Times Co. announced this afternoon that it has struck a deal to sell its nine-station TV group to Oak Hill Capital Partners, a private equity firm, for the $575 million.
The parties were not discussing details of the deal, but the price appears to be a good one.
Larry Patrick, a leading station broker who was not involved in the transaction, pegged the group’s annual cash flow at $45 million, although he had heard figures ranging from $43 million to $47 million. Assuming $45 milllion, he said, the price represents a cash-flow multiple of 12.7, in line with other recent deals. “That’s about the right price to pay for these things.”
The big questions now, Partrick said, are who will Oak Hill Capital Partners tap to run the station group and will it hold the group together or spin off one of more of the stations to help finance the deal.
The New York Times announced last September that it was exiting the broadcasting business to focus on its newspaper and “rapidly growing digital businesses.”
The Times group comprises nine network-affiliated stations in eight markets:
WTKR Norfolk, Va. (CBS)—DMA 42
WREG Memphis (CBS)—DMA 44
KFOR Oklahoma City (NBC)—DMA 46
KAUT Oklahoma City (MNT)—DMA 46
WNEP Scranton, Pa. (ABC)—DMA 53
WHO Des Moines, Iowa (NBC)—DMA 73
WHNT Huntsville, Ala. (CBS)—DMA 84
WQAD Moline, Ill. (ABC)—DMA 96
KFSM Ft. Smith, Ark. (CBS)—DMA 102
That the buyer is a private equity firm will surprise no one. Consortiums of such investment groups emerged as the buyers in the two largest deals of 2006, Univision and Clear Channel Communications.
Oak Hill Capital Partners traces its roots to Robert M. Bass, the billionaire investor based in Fort Worth, Texas.
In the 1980s, Bass formed an independent firm to invest his private equity capital. From 1986 to 1998, the firm directed more than 26 transactions, representing investments of more than $1.2 billion of equity capital.
In 1999, with Bass as the lead investor, the firm launched Oak Hill Capital Partners, L.P., which became the successor vehicle for all of the firm’s private equity activity. This fund was formed with $1.6 billion in capital commitments and invested in 18 portfolio companies. In 2005, Oak Hill closed Oak Hill Capital Partners II, L.P. with $2.5 billion in capital commitments.
According to a 2005 Business Week story, investors in Partners II include Bill Gates and Phil Knight, the founder and chairman of Nike. Gates contributed $70 million; Knight, $200 million.
The managing partners are J. Taylor Crandall, Steven B. Gruber, Denis J. Nayden and Mark A. Wolfson. None has broadcasting in his background.
According to the firm’s Web site, it has no other broadcast properties, but its portfolio does include three small cable operators—Wometco Cable Corp.; WideOpenWest and Atlantic Broadband Group—and a telephone company, Cincinnati Bell.
Goldman, Sachs & Co. advised the New York Times Co. on the sale.