Nexstar Media Group said Wednesday that it has struck deals to sell 19 local TV stations in 15 markets for $1.32 billion, making good on its promise to sell assets after its $4.1 billion deal to buy Tribune Media.
Nexstar, led by chairman, president and CEO Perry Sook, was expected to announce a sale of select stations after agreeing to divest stations as aart of the Tribune takeover to comply with regulatory ownership limits.
TV station company Tegna Inc. has reached a definitive agreement with Nexstar to purchase 11 stations in eight markets for $740 million, contingent on the closing of the Nexstar-Tribune deal, which is expected late in the third quarter or early in the fourth quarter. "The proposed transaction will add complementary markets to Tegna's existing portfolio of top network affiliates, including four affiliates in presidential spending battleground states," Tegna said.
The stations covered by the deal include WTIC and WCCT, which are Fox and CW affiliates in Hartford-New Haven, Conn.; WATN and WLMT, which are ABC and CW affiliates in Memphis, Tenn.; and CBS affiliate KFSM in Fort Smith-Fayetteville, Ark. Tegna said it expects the transaction to be accretive to its earnings per share within a year after close and immediately accretive to free cash flow per share.
The E.W. Scripps Co., meanwhile, will acquire eight stations in seven markets for $580 million. They include WPIX, the CW affiliate in New York City, CW affiliates KASW in Phoenix and WSFL in Miami–Fort Lauderdale, as well as Fox affiliate KSTU in Salt Lake City. Scripps has granted Nexstar the option, exercisable from March 31, 2020 through the end of 2021, to buy back WPIX.
Nexstar said it also "remains engaged in active negotiations" to divest two stations in Indianapolis and highlighted that the net proceeds from the divestitures agreed so far "exceed those initially estimated." The company said it intends to use the proceeds from the station sales to fund the Tribune acquisition and to reduce debt.
"From an economic standpoint, together the transactions represent a multiple of approximately 11 times the aggregate two-year average broadcast cash flow of the stations to be divested," said Sook. He added that the deals "reinforce our confidence that the Tribune transaction will result in approximately 46 percent growth in Nexstar’s average annual free cash flow in the 2018/2019 cycle to approximately $900 million."
Tegna president and CEO Dave Lougee said about the assets his company is buying: "These stations are an excellent strategic and financial fit and bring additional geographic diversity to our portfolio of leading stations. They add four additional key markets to our strong political footprint as the 2020 presidential election gets underway. We continue to invest in growth and remain well-positioned to capitalize on consolidation opportunities that are both strategic and financially prudent.”
And Scripps' president of Local Media Brian Lawlor said: "With these acquisitions, Scripps will reach 30 percent of U.S. television households, entering Virginia and Utah for the first time."