An analysis of station trading shows the majority of second quarter deals were the result of spinoffs from Nexstar’s acquisition of Media General.
Kagan: Broadcast TV M&A Hit $681M In 2Q
U.S. TV station M&A volume reached $681.2 million in the second quarter of 2016, 80% of which came from spinoffs initiated by Nexstar Broadcasting Group to comply with FCC regulations involved in its pending Media General acquisition, announced on Jan. 27. The M&A figure comes from S&P Global’s SNL Kagan broadcast media research analyst group.
In its effort to garner regulatory approval for its Media General acquisition, Nexstar arranged for a number of spinoffs, selling a total of 12 stations in 10 markets to five different buyers. The largest of these deals — and the top TV deal of the quarter — was the $270 million sale of KWQC Davenport, Iowa (NBC) and WBAY Green Bay, Wis. (ABC, to Gray Television.
The other spinoffs involved Graham Holdings (two stations for $120 million); MSouth Equity Partners and Heartland Media (five stations for $115 million); Bayou City Broadcasting Lafayette (one full- and one low-power station for $40 million); and Marquee Broadcasting (one station for $350,000).
Six of the stations sold by Nexstar are technically still owned by Media General, but Nexstar made the announcement as the seller, with the transactions expected to close soon after approval and closing of its Media General acquisition. Nexstar reported an average 11.1x trailing seller’s multiple for the spinoffs. SNL Kagan estimates that translates to a forward (2016/17) multiple of 10.0x.
The second quarter’s largest TV deal not involving Nexstar was the TV industry exit of Calkins Media Inc., which sold its three TV stations for $82 million to Raycom Media and American Spirit Media. Due to the FCC’s incentive auction quiet period initiated on Jan. 12, this deal will not receive FCC approval before the end of the auction.
TV station deal volume in the first half of 2016 totaled $5.29 billion with 96 full-power and 38 low-power stations sold. While the vast majority of the TV station deal volume stems from the Nexstar and Media General merger and its spinoffs, a total of $117.6 million (15 full-power and 35 low-power stations) came from deals activity not involving either one of the merger parties.