Nexstar Swapping Fox For ABC In Evansville

Having lost the Fox affiliation in Evansville, Ind. (DMA 103), Nexstar Broadcasting Group has agreed to purchase the market’s ABC affiliate, WEHT, from Gilmore Broadcasting for $18.5 million, Nexstar announced Monday afternoon.

To help finance the purchase, Nexstar said it is spinning off its one-time Fox affiliate, WTVW in the market to Mission Broadcasting for $6.7 million. It would borrow the rest of the purchase price ($11.8 million) through its senior credit facility, it said.

Mission is a company set up by Nexstar to be its duopoly partner in 13 other markets. As in those other markets, Nexstar will enter into a local services agreement with Mission to provide sales and other services to WTVW. In other words, Nexstar will continue to operate WTVW in tandem with WEHT.

The transactions are subject to FCC approval and are expected to close by the end of 2011.

The Evansville deal comes just weeks after the board of Nexstar announced that it was exploring “strategic alternatives,” including a possible sale of the publicly traded company. Last week, TVNewsCheck reported that Nexstar was looking for private equity firms to buy out ABRY Partners, Nexstar’s longtime majority shareholder.

Such a swap-out of old private equity money for new private equity money could leave current management in place. That management is headed by founder and CEO Perry Sook.

In a prepared statement today, Sook said the price for WEHT is approximately four times the average 2010-2011 projected cash flow.

“Under Nexstar’s ownership the station will realize additional retransmission revenues as well as synergistic operating improvements, and on a pro-forma basis the acquisition is both immediately accretive to results and de-leveraging on a debt-to-cash-flow basis.”

Upon closing, Nexstar will own one station and provide sales and other services to another in 22 of the 36 markets where it operates. The deal also increases its number of ABC affiliates to 11.

Nexstar, which reported revenue of $313 million last year, has been locked in a running battle with Fox over programming fees or reverse compensation that the network has begun demanding from all of its affiliates as a condition of affiliation renewal.

Rather than pay the fees, essentially a share of the retransmission consent fees that many stations now receive from cable and satellite operators, Nexstar has chosen to give up its Fox affiliations in four markets — Evansville; Terre Haute, Ind.; Fort Wayne, Ind.; and Springfield, Mo.

Christopher Miller of Gammon-Miller, LLC acted as broker in the transaction.