Whale of a sale in Seattle

Gaylord sells CBS affil to Cox for $160 mil

NEW YORK — Gaylord Entertainment Co. is to sell its Seattle TV station, KSTW, to Cox Broadcasting Inc. for $160 million, twice what the outlet was expected to fetch.

But news of the deal sent Gaylord’s stock dropping $1 to $23 as it ended hopes among Wall Street traders that a takeover of Gaylord was in the works. Those rumors, prompted by cancellation of a Gaylord exec’s presentation to an investment conference last week, had sent the stock to its highest point in four months in recent days.

The acquisition will raise Cox’s television coverage of the national audience from 8.5% to just over 10%, making it the 11th-largest station group owner, according to Andrew Fisher, exec VP, television, at Cox.

Cox is paying a high price for KSTW, however. After a switch of its affiliation from independent status to CBS in March 1995, KSTW’s cash flow plummeted from about $9 million a year to barely above break even, according to UBS Securities analyst Ed Hatch. He had predicted the station would fetch between $60 million and $70 million.

The downturn in performance is what prompted Gaylord to put it on the market last October. Fisher acknowledged the problems at the station but said Cox was an “experienced network affiliate operator” and hoped to improve its performance.

“We have every reason to believe that over the long run we can be competitive,” Fisher added. He added that while the price might appear to be expensive, relative to recent deals in the TV station market, Cox was an “operator for the long term.”

The sale leaves Gaylord with just one station, KTVT Dallas, which had switched to CBS at the same time as KSTW. But the Dallas station has performed better than the Seattle station, increasing its cash flow 50% last year.

Gaylord CEO E.W. Wendell said the company was “very pleased” with the sale, noting that Cox “has the reputa-tion of being a successful station group concerned about the communities in which they broadcast.” A spokesman for Gaylord said the cash from the KSTW sale would be used to pay down debt, which now stands at about $350 million.

The deal is subject to Federal Communications Commission approval.

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