The $212 million deal comprises full-power ABC affiliates in Denver (KMGH); San Diego (KGTV); Bakersfield, Calif. (KERO); and Indianapolis (WRTV) and low-power Azteca America affiliates in Denver; Fort Collins, Colo.; Colorado Springs, Colo.; San Diego; and Bakersfield, Calif.
The FCC today approved E.W. Scripps’ application to buy the McGraw-Hill TV station group for $212 million in cash. The deal comprises full-power ABC affiliates in Denver (KMGH); San Diego (KGTV); Bakersfield, Calif. (KERO); and Indianapolis (WRTV) and low-power Azteca America affiliates in Denver; Fort Collins, Colo.; Colorado Springs, Colo.; San Diego; and Bakersfield, Calif.
CEO Steve Lacy made no bones about having taken a good, hard look at the four-station McGraw-Hill TV group. But the final multiple was beyond the range that was good for shareholders, he said.
The $212 million that Scripps agreed to pay McGraw-Hill for its station group justifies higher valuations for other stations groups like Belo and Sinclair, says Wells Fargo analyst Marci Ryvicker.
The four ABC affiliates in Denver, San Diego, Bakersfield, Calif., and Indianapolis and five low-power Azteca affiliates go for $212 million in cash. “We are energized by the addition of good people at good stations in good markets,” says Scripps SVP Brian Lawlor.
Mike McKinnon has put in a bid for the four stations, but is particularly interested in ABC affiliates KGTV San Diego, which he could pair with his KUSI independent, and KERO Bakersfield, Calif. The McGraw-Hill group also includes KMGH Denver and WRTV Indianapolis.
Activist hedge fund Jana Partners and the Ontario Teachers’ Pension Plan Board have bought 5.2% of the publishing, investment analysis and TV station company — and say that they may try to break it up. The investors reported in SEC filings Monday that they have “no present plan or proposal” for the company run by CEO Terry McGraw. But they plan to talk to McGraw-Hill’s directors, shareholders and others about changes “to improve shareholder value.”
Increases in retransmission consent revenue can’t offset the decrease in political ad money compared to the year-ago quarter.
McGraw-Hill has begun shopping its four-station group and is said to be drawing interest from the likes of Nexstar, Meredith and Belo. Based on its financials for 2010 and 2011, the group is worth between $150 million and $200 million, although bidding and the expection of big revenue gains from political advertising in 2012 could push the number higher.
Calling the McGraw-Hill Broadcasting stations now up for sale a “well managed group,” media investment banker Michael Alcamo says he expects the properties to command a strong multiple. And he expects to see quite a few would-be buyers bidding for individual stations, rather than the entire group.
It’s selling ABC affiliates in Denver (KMGH), San Diego (KGTV), Bakersfield, Calif. (KERO), Indianapolis (WRTV) and Azteca America affiliates in Denver, Fort Collins, Colorado Springs, San Diego and Bakersfield.
Growth in automotive and service time sales and an increase in retransmission revenue offset the anticipated decline in political advertising in a non-election year.
The company cites strong political advertising and improvement in national and local time sales as key factors.
The deal puts the music diginet into an additional 2.5 million homes in Bakersfield, Calif.; Denver and San Diego. Counting the three McGraw-Hill stations, the network now claims coverage of 35% of U.S. TV homes in 57 markets.
Larry Blackerby, the current GM of KPRC Houston, will take over as head of McGraw-Hill’s Indianapolis ABC affiliate in January, succeeding the retiring Donald Lundy.