Lilly Makes Bid For McGraw-Hill’s WRTV

George Lilly’s SJL Holdings has submitted a bid for McGraw-Hill’s Indianapolis ABC affiliate, WRTV, Lilly confirmed today.

“We’re not interested in buying the group,” Lilly said. “We want to grow slowly. Indianapolis (DMA 27) certainly fits our profile. Geographically, it fits with Toledo.”

Lilly wouldn’t disclose what he bid but said he has financing in place from Sankaty Advisors.

Sankaty is the unit of Bain Capital that provided financing for SJL’s $30 million purchase late last year of two small-market ABC O&Os — WJRT in Flint, Mich. (DMA 69) and WTVG in Toledo (DMA 70).

“We’re pretty comfortable that something’s not going to sell unless it’s in the 9-10X range,” he said. “We’re comfortable working in that range. One of the issues is getting over the problems of 2009. Another is no one is going to sell anything off 2008 numbers. The number has to be based on 2010-11 [blended cash flow].”

WRTV has the fourth-rated news in Indianapolis, implying that there’s considerable room for improvement in operations and revenue. [Editor’s note: This story originally said that WRTV was third-rated in news.]

As for his chances of winning against a bidder willing to purchase McGraw-Hill’s entire four-station group, Lilly said he’s managing expectations.

“Clearly, I think they would like to sell as a group,” he said. “I think our chances are limited. On the other hand, someone may be able to buy it as a group but want only the West Coast stations and would be willing to have a dialogue with us.”

In an interview with TVNewsCheck Editor Harry Jessell late last year, Lilly said he’s looking to build his station group to six to eight stations. All of those stations would be managed by SJL Broadcast Management.

The Lilly family also owns several other stations under separate entities. Lilly Broadcasting and SJL of Erie own and run stations in Elmira, NY, and Erie, PA.

In the past, Lilly has been successful in flipping stations. He teamed with the private equity firm Blackstone Group to form Montecito Broadcast Group in 2005 to purchase four stations from Emmis Communications for $259 million. Less than two years later, he sold the stations to New Vision for more than $330 million.

And those ABC stations he recently purchased for $30 million? It was Lilly and another investment group that sold the stations to ABC for $120 million.

Not surprisingly, that has some investors seeking to latch onto Lilly’s coattails.

“We have had a couple of inquiries from financial houses about would we be willing to work as management” if they bought the Indianapolis station, he said. “We’re not interested, we already have financing in place.”

Morgan Stanley is brokering the deal for McGraw-Hill and letters of intent/preliminary bids were due at the end of July. Once offers have been evaluated, McGraw-Hill management will make presentations to finalists.

“I think they were hoping to give us some feedback this week,” Lilly said, adding that he’s heard nothing yet.

Nexstar, Meredith and Belo are among those considered to be likely bidders for the McGraw-Hill group.