Signaling its intent to become a major player in the broadcasting business, private investment firm Hicks, Muse, Tate & Furst Inc. has struck a deal to buy Lin Television station group for $1.7 billion in cash plus assumption of debt.
Lin, in which AT&T has a 45% stake, owns eight Big Three network affiliates, including the group’s flagship NBC affil KXAS Dallas and CBS affil WISH Indianapolis, and operates four other stations through local marketing agreements. Although the deal was announced after the close of stock trading, Lin’s stock price was up 75¢ Tuesday to close at $48.625.
Hicks Muse, which owns significant stakes in radio giants Chancellor Broadcasting and Capstar Partners, said the Lin acquisition will lay the foundation for the firm’s “buy-and-build” investment strategy for TV and radio stations. If completed, the Lin deal will be the largest investment by Hicks Muse since its founding in 1989.
In announcing the deal late Tuesday, Lin said its board of directors has voted in favor of the merger, as has AT&T. AT&T announced in December it was looking to shed its stake in Lin as part of a companywide effort to sell holdings that aren’t part of its core communications business.
Lin stockholders are expected to vote on the sale before Nov. 30. The agreement calls for Lin shareholders to receive $47.50 per share in cash, plus 8% interest. Hicks Muse, whose investors include major pension funds and insurance companies, will absorb $260 million in outstanding debt. The transaction, also subject to approval by the Federal Communications Commission, is expected to close by mid-May.
Under the terms of the deal outlined Tuesday, a newly formed unit of Hicks Muse will merge with Lin Television. Hicks Muse officials said Lin will retain its name, its Providence, R.I., headquarters and current management team, led by Gary Chapman, Lin’s well-regarded president and CEO.
Hicks Muse chairman and CEO Thomas Hicks indicated the new unit will take advantage of deregulation of decades-old TV station ownership restrictions, as the investment firm has done with radio stations over the past two years.
“By combining the financial and broadcasting industry expertise of Hicks Muse and Lin, we plan to capitalize on the unique and favorable conditions now present in the television broadcasting industry and be an active participant in the future of network television,” Hicks said.
Also, Lin, Hicks Muse and AT&T have struck a side deal whereby AT&T will sell its wholly owned WOOD-TV outlet in Grand Rapids, Mich., for about $122.5 million. If the Lin-Hicks Muse merger is not completed, AT&T still will sell WOOD and its local marketing agreement with WOTV Grand Rapids, to Lin.
Hicks Muse officials said there are no plans to combine Lin Television’s operations with Sunrise Television, the Hicks Muse unit formed late last year to buy TV stations in mid- to small-size markets.
In addition to its radio holdings, Hicks Muse also owns a stake in cable MSO Marcus Cable.