Sinclair Buying Bonten Stations For $240M

Sinclair Broadcast Group today announced the acquisition of 14 stations in eight markets from Bonten Media for $240 million.

The deal takes advantage of the FCC decision yesterday to restore the UHF discount in calculating station group coverage for purposes of the FCC’s national ownership cap on station group coverage — 39% of TV households.

The Bonten stations add about 1% to Sinclair’s total reach, Sinclair said.

Without the discount, the deal would put Sinclair above the cap at 39.6%. But with the cap, it remains well below the cap at around 25%.

Veteran broadcaster Randy Bongarten, backed by the Diamond Castle private equity firm, formed Bonten Media in 2007 by purchasing Bluestone Television for $230 million.The old Bluestone station still form the backbone of the group.

Through duopoly partner Esteem Broadcasting, Bonten added Fox affiliates in Greenville, N.C., and Chico-Redding, Calif. Esteem owns the stations, but Bonten operates them through joint sales and shared services agreements.

Not included in the deal is WFXI, one of Esteem’s two Fox affiliates in Greenville. WFXI was sold in the FCC incentive auction for $42.1 million.

The Bonten stations:

“We look forward to welcoming the Bonten employees into the Sinclair family and are pleased to be growing our regional presence in several states where we already operate,” said Chris Ripley, president-CEO of Sinclair. “We believe our economies of scale help us bring improvements to small market stations, including investments in news, other quality local programming, and multicast opportunities with our emerging networks of Comet, Charge! and TBD.”    

Including the Bonten station acquisitions, all previously announced acquisitions and pro forma for expected synergies, Sinclair’s 2015 and 2016 media revenues would have been $2.236 billion and $2.620 billion, respectively, the company said. “The $240 million purchase price represents a 6.7x multiple and is expected to be on average approximately $25 million accretive to our free cash flow on an annualized basis.”

In a note to her clients, Wells Fargo analyst Marci Ryvicker says the deal amounts to a “drop in the bucket” for Sinclair. “It by no means precludes other deals from happening – large or small – as [Sinclair] clearly still has plenty of cap and financial room.

“And if 2017 looks anything like 2011 (which is when [Sinclair] ”opened” the M&A market for the broadcast space), 2012 and 2013, it won’t matter what the specific deals are as [free cash flow] will continue to go up meaningfully, as will the stock price (in our view).”