Scripps Buying 15 Cordillera Stations For $521M

The E.W. Scripps Co. is acquiring 15 full- and low-power stations in 10 markets from Cordillera Communications, furthering what Scripps calls its “strategies to increase the durability and improve the operating performance” of its broadcast portfolio.

The purchase price is $521 million. That reflects a 7.2 buyer’s multiple (with tax benefits and $8 million a year in synergistic savings) and a 9.5% seller’s multiple (without the tax benefits and savings).

“Today, we increase our cash, improve out margins and grow our national footprint — all in one transaction,” said CEO Adam Symson in a call with analysts this morning following the deal’s announcement.

And he said that Scripps may not be done buying. In fact, he said, Scripps would “aggressively pursue” other big deals, even though Cordillera and other recent acquisitions will swell its debt leverage to 5.8.

Cordillera Communications is owned by Evening Post Industries.

Symson said that Scripps won the stations at auction, beating out several other unnamed groups.

Scripps is buying only 15 of the 16 stations that Cordillera put on the block last August. Scripps excluded NBC affiliate KVOA Tucson, Ariz., from the buy because it already has a duopoly in the market. FCC rules say it can own only two stations in a market.

Cordillera said today it has agreed to sell KVOA to Quincy Media.

On the call, Brian Lawlor, Scripps president of local media, said he expects no trouble getting the deal through the FCC. It includes two duopolies involving two Big Four combinations (in Helena, Mont., and Helena, Mont.), but in each case one of the stations is low power.

The FCC rules govern the number of full-power stations broadcasters may own in a market, but not low-power stations.

The acquisition will expand Scripps’ footprint to 51 stations in 36 markets with a reach of nearly 21% of U.S. TV households. Those numbers include three stations that Gray is spinning off to Scripps from its merger with Raycom — KXXV-KRHD Waco, Texas, and WTXL Tallahassee, Fla.

The 10 Cordillera markets have about 700 employees.

The stations Scripps is acquiring:

• WLEX, the NBC affiliate in Lexington, Ky.
• KOAA, the NBC affiliate in Colorado Springs, Colo.
• KATC, the ABC affiliate in Lafayette, La.
• KSBY, the NBC affiliate in Santa Barbara-San Luis Obispo, Calif.
• KRIS, the NBC affiliate, and KAJA, a Telemundo affiliate, in Corpus Christi, Tex.
• KPAX and KAJJ, a CBS affiliate in Missoula, Mont.
• KTVQ, a CBS affiliate in Billings, Mont.
• KXLF-KBZK, the CBS affiliate in Butte-Bozeman, Mont.
• KRTV, the CBS affiliate, and KTGF, the NBC affiliate, in Great Falls, Mont.
• KTVH, the NBC affiliate, and KXLH, the CBS affiliate, in Helena, Mont.

Scripps emphasized what it called the resulting “stronger Scripps portfolio:

• Scripps will have the No. 1 Nielsen-rated TV stations in 11 of its 36 markets.
• The Cordillera stations will significantly diversify the Scripps portfolio. The 51 stations will include 18 ABC affiliates, 11 NBC affiliates, seven CBS affiliates and two Fox affiliates.
• Scripps will operate seven duopolies, efficiently enhancing the depth and durability of the portfolio.

“Our stations are as strong as they’ve been across any point in our 32-year history,” said Terry Hurley, president of Cordillera. “We’ve had a good run, and we’re proud of how our stations have excelled over the years. We’re also heartened to know they’ll continue to be in exceptional hands.”

The Scripps transaction will be financed through an incremental term loan underwritten by Wells Fargo. Scripps’ existing Term Loan B and senior unsecured notes will remain in place. The company anticipates its total leverage ratio, net of cash, would be approximately 4.8x at closing, including estimated synergies.

The deal is expected to close in the first quarter of 2019.

Methuselah Advisors acted as financial adviser and Cooley LLP acted as legal adviser to Cordillera Communications. BakerHostetler acted as legal adviser for Scripps.