LIN Buying New Vision Stations For $342M

LIN TV Corp. today announced it is purchasing eight full-power and two low-power network affiliates in eight markets from New Vision for $330.4 million and the assumption of $12 million of debt.

LIN also said that it will be assuming agreements under which it will operate three other network-affiliated stations owned by third parties in three markets.

The company expects to close on the acquisition in late 2012, pending regulatory approvals and other closing conditions.

The stations (those in italics are owned by others, but operated by New Vision under contract. Listing does not include full-power satellite stations. The group airs additional network programming on in some markets on subchannels):

• KOIN (CBS) Portland, Ore. (DMA 22)

• KSNW (NBC) Wichita-Hutchinson, Kan. (DMA 67)

• KHON (Fox) Honolulu (DMA 71)

• KSNT (NBC)/KTMJ-CA (Fox)/KTKA (ABC) Topeka, Kan. (DMA 136)

• WIAT (CBS) Birmingham, Ala. (DMA 39)

• WJCL (ABC)/WTGS (Fox) Savannah, Ga. (DMA 92)

• KIMT (CBS) Mason City, Iowa (DMA 153)

• WKBN (CBS)/WYFX-LP (Fox)/WYTV (ABC) Youngstown, Ohio (DMA 110)

“We have been evaluating the M&A landscape for quite some time and selectively pursued New Vision Television as it adds geographical diversity, particularly in the South and Western U.S. New Vision Television has a reputation for operating high-quality, well-run media properties,” LIN CEO Vincent Sadusky said in a statement.

“This is a terrific opportunity to strengthen our mid-size market station portfolio in an accretive manner and will provide new markets to expand our digital businesses.

“The deal is structured and financed in a way that preserves our financial flexibility and allows us to capitalize on significant synergies, as well as leverage our technical capabilities, corporate infrastructure and interactive growth platforms to benefit both our viewers and advertisers,” added Sadusky.

LIN Television currently reaches 7.3% of U.S. television households and is affiliated with all major networks. With the New Vision Television stations, the company will operate or service 50 network affiliates in 23 markets, reaching 10.6% of U.S. television households.

New Vision CEO Jason Elkin said: “This is a bittersweet development. I have never worked with a more dedicated and committed group of local broadcasters than the management and staff of New Vision, led by my COO John Heinen, CFO Eric Simontis and EVP Steve Spendlove.

“The decision to sell to LIN Media was not an easy one, but we negotiated a fair price and so decided that now is the right time for me and others at New Vision to begin to look at new opportunities.”

Backed by private equity money, Elkin twice before built small station groups and flipped them for hefty profits — once in the early 1990s and once in the early 2000s.

But the third time did not work out as well for Elkin or his investors.

With the backing of HBK Capital Management of Dallas, Elkin began assembling  the third iteration of New Vision in 2006 by buying the stations in Birmingham and Mason City from Media General in 2006 for $35 million.

The key deal was with Montecito in 2007 for the stations in Portland, Honolulu, Wichita and Topeka. New Vision paid $330 million, the same price it’s now getting for selling the entire group to LIN.

Unable to make a go of it during the recession, New Vision went through Chapter 11 bankruptcy in 2009, which wiped out its debt and provided $30 million in new financing.

In a 2007 interview, Elkin said his goals were to build a group with $100 million in cash flow and hold on to the stations for a long time. He fell far short on both.

In a note to clients, securities analyst Marci Ryvicker of Wells Fargo said that New Vision has been ripe for takeover. “We believe consolidation involving a private company transaction makes sense and expect New Vision’s assets to match up nicely with [LIN’s] mid-market exposure ([its] stations are primarily in the Top-75 DMAs).”

She also said she expects to “get color” on multiples and funding on LIN’s first-quarter earning call. That is set for Wednesday at 9 a.m. ET.