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.
McGraw-Hill Puts TV Group On The Block
The McGraw-Hill Companies today announced it has retained Morgan Stanley & Co. LLC to pursue the divestiture of its broadcasting group. The company said “the television stations in the group are in desirable markets and should be attractive to strategic and financial buyers with a focus on media.”
McGraw-Hill’s broadcasting group had revenues of almost $100 million in 2010, up 18% over the prior year. It includes 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.
The planned divestiture is part of a continuing portfolio review that McGraw-Hill is undertaking across the enterprise to reevaluate its strategic core and ensure it is appropriately allocating capital to generate shareholder value. The company is also evaluating G&A costs across the corporation to ensure it continues to support its businesses efficiently.
“McGraw-Hill has successfully evolved its business mix over the years and is committed to driving superior shareholder value by focusing on high-growth global brands and businesses,” said Harold McGraw III, chairman, president-CEO.
Comments (16)
Paul Gourley says:
June 14, 2011 at 10:48 am
So………….. what are they going to do buy more print vehicles???That will surely drive shareholder value! They have quality properties and some good upper management.
Albert Pica says:
June 14, 2011 at 11:12 am
This makes no sense…
len Kubas says:
June 14, 2011 at 11:31 am
McGraw-Hill is a very large company, and the tv station group is a very small part of their business; 1.6% of revenues. This may sound unfortunate, but it makes more than a little sense.
Sean Lubens says:
June 14, 2011 at 11:37 am
ABC affiliates should be of interest to acquisition minded, duopoly interested players that can benefit from the economies in scale, assuming the price is right. This decision appears to be strategically sound, if you’re plan is not to grow scale then look to divest and redeploy your capital.
Jerry Fritz says:
June 14, 2011 at 11:55 am
Yes, this worked out so well for the NYTimes. Stock was at $25 when they sold TV group, now around $7.
Scott McDaniel says:
June 14, 2011 at 1:15 pm
I think it’s more short term oriented than long term. As always, follow the money. Who inside M-H stands to land a huge bonus and/or stock immediately after the sale? I do not see this as a long term benefit…not at those profit margins last year in this current “economy”.
Peter Bright
len Kubas says:
June 14, 2011 at 1:20 pm
It’s less than 2% of their revenues, Peter; deminimus. They’ve been under a hiring freeze for a decade and have under-invested in their facilities for at least as long. The die was cast long ago, and any new owner or owners will actually have to catch up.
george willingmyre says:
June 14, 2011 at 1:54 pm
Ed Quinn did a great job running the M-H TV properties and Darrell Brown has done the same. Might not be a bad idea for Darrell to put together a group to buy the stations.
len Kubas says:
June 14, 2011 at 1:58 pm
Agree; having known both Ed and Darrell.
Kristi Allain says:
June 14, 2011 at 2:04 pm
Ed and Darrell did a great job running the stations into the ground!
Maria Laing says:
June 14, 2011 at 3:58 pm
So who are the players that might step up to buy the properties? Do they pay based on last year’s politically inflated multiples or do they go for something closer to fire sale? Duopoly, network, outside money that wants the licenses for other purposes? Anybody have any thoughts? Broadcast Group has provided good income to Corporate for nearly 30 years but based on a 1972 purchase price of about 54 million for all four stations (radio stations were sold to individual buyers), this deal’s gonna need some creative financing to spare Mr. Mc Graw some horrendous capital gains. BTW, Public Trader, you missed the mark in your last comment.
len Kubas says:
June 14, 2011 at 4:36 pm
One thing MGH has a surplus of is bean-counters, and one suspects the buyers will know the cycles of the market. Of course, Ed ran the division during a totally different environment than Darrell, but anybody who looked around a bit knows that the budget allocation was done above both of their heads.
Kristi Allain says:
June 14, 2011 at 8:14 pm
I don’t think I missed the mark. The stations consistently underperform in each market.
Joe Jaime says:
June 14, 2011 at 10:18 pm
At one time… ABC Cap Cities would have loved to own Denver, San Diego, Indy and even Bakersfield since they have a Fresno station … not sure now. With a LA O&O plus a SF O&O this addition should look attractive.
Maria Laing says:
June 15, 2011 at 9:40 am
Public Trader needs to re-read Iconoclastd’s most recent comment. Corporate bean counters demanded an awful lot. While the stations do, indeed, underperform their respective markets you can trace their decline back to 1972 when Mc Graw-Hill bought the properties. It was pretty flip to blame Ed and Darrell and a cheap shot, I thought, when the problems go back much further in time and much higher into the corporate structure.
Hope Yen and Charles Babington says:
June 15, 2011 at 11:09 am
bottom line: Is Broadcast Television an unusually attractive arena into which to put your cash? Perhaps if you’re a broadcaster, and 100% broadcast oriented, suck as Perry Sook, George Lilly, et al, you can focus all your energies on these stations and improve them without going broke in the process, and then sell them, IF and only if the Broadcast Industry survives as a healthy business. On the other hand, if you’re a broad based publicly traded entity….?? I see MGH’s decision based on long term growth, and think they’ve probably seen a topping out and slow decline of the industry. After all, Denver, San Diego and Indy aren’t exactly ‘dog meat’ markets!