Nexstar Buying KASW Phoenix For $68M

Nexstar Broadcasting Group is paying $68 million plus working capital to Meredith Corp. for CW affiliate KASW Phoenix (DMA 11). Meredith and its sidecar SagamoreHill purchased KASW from Gannett Co. and Sander Media as part of Gannett’s acquisition of Belo Corp. As part of FCC approval, Meredith and SagamoreHill voluntarily agreed to divest KASW to an independent buyer within 90 days of its June 19 closing.

Nexstar said the proposed acquisition “is expected to be accretive to Nexstar’s operating results immediately upon closing and inclusive of all other previously announced transactions, will expand the company’s coverage to 57 markets in 22 states, reaching approximately 19.7 million television households.

Nexstar said it intends to finance the station acquisition through borrowings under its senior credit facilities. The transaction is subject to FCC approval and other customary approvals, and is expected to close in the first quarter of 2015.

In the first 12 months following the closing of the transaction, KASW, Nexstar said, is expected to generate approximately $14 million in adjusted broadcast cash flow and is expected to provide free cash flow accretion in the first year of ownership of approximately $0.30 per share.

Said Nexstar Broadcasting Group President-CEO Perry A. Sook: “The planned acquisition of KASW-TV in Phoenix is highly accretive to Nexstar’s operating results, further strategically diversifies Nexstar’s station portfolio, and presents a great opportunity for the company to leverage its intellectual capital and operating management disciplines to drive significant synergies.

“In addition, the transaction offers Nexstar entrée to the Arizona and Phoenix markets which represent a natural complement to our existing operations in the Southwestern region of the United States.

“Pro-forma for expected synergies,” Sook continued, “including additional retransmission revenues, the purchase price for KASW is less than 5.5 times the average 2014-15 pro-forma projected cash flow. Under Nexstar’s ownership we intend to initiate local programming and a local community orientation.”

Marci Ryvicker, Wells Fargo senior analyst commented on the deal: “First and foremost, we think this is a good/ smart entrance into the Phoenix market, which is the 12th largest DMA…. It also complements Nexstar’s existing operations in the Southwestern region of the U.S. Given that this is a new market and state (Arizona) for Nexstar, we are thinking there is more to come.”