Hicks Muse Tate & Furst, Hearst-Argyle top TV bidders

NEW YORK — Hearst-Argyle Television and Hicks Muse Tate & Furst lead a group of four companies vying for Pulitzer Publishing Co.’s TV station group, Wall Street sources said, with the bidding expected to push the price to as much as $1.8 billion.

After the first round of offers was made earlier this month, the short list also includes Clear Channel Communications and Gannett Co., although neither is favored to win the auction. The auction is expected to be finalized within weeks.

St. Louis-based Pulitzer Publishing announced in late February that it had retained investment firms Goldman, Sachs & Co. in New York and Huntleigh Securities in St. Louis to “explore potential strategic alternatives” for its broadcast division.

In this era of get big or get out, however, the announcement was seen as putting the broadcast properties of print-dominated Pulitzer on the block.

Pulitzer owns nine network affiliated stations in markets that include Orlando, Fla.; Omaha, Neb.; Winston-Salem, N.C.; and Albuquerque, N.M. Orlando is seen as the station with the most strategic value, because its market is growing so fast.

Hearst-Argyle is likely to be an aggressive bidder as Wall Streeters see Pulitzer’s stations as both a strategic and geographic fit.

The 15-station group, itself the result of a merger last August, is committed to increasing its national coverage to 20% from its current 11%. Its acquisition of Pulitzer’s properties, which cover 5.5% of the country, would take Hearst-Argyle more than half way toward this ambitious goal.

Moreover, a recent Merrill Lynch report estimates that Hearst-Argyle’s borrowing capacity of $1.5 billion could be raised to $2 billion with an equity infusion, thus qualifying the company financially.

Geographically, there are no debilitating overlaps between the station portfolios of Pulitzer and Hearst-Argyle. In fact, Pulitzer’s Orlando station is considered especially complementary to Hearst-Argyle’s WCVB in Boston, which currently accounts for 30% of the would-be buyers’ broadcast cash flow.

Hicks Muse, the Dallas-based leveraged buyout firm, has expanded aggressively in broadcasting in the past couple of years and is expected to be just as aggressive in this auction.

It has several possible entities it could make its offer through, including its partnership with NBC. While the Peacock web is not thought to be involved with Hicks Muse’s offer currently, several of the stations are NBC affiliates and some Wall Streeters say NBC could get involved through the partnership.

Hicks Muse could also use Lin Television Corp., which it acquired last week, or its radio giant Chancellor Media Corp., Wall Streeters say. After Chancellor CEO Scott Ginsburg quit last week, Chancellor chairman Tom Hicks said he planned to diversify the company into television. Hicks Muse declined comment Wednesday.

On the other hand, Gannett and Clear Channel are likely to be more cautious.

Gannett, which declined to comment on its involvement, has a disciplined approach to acquisitions that is expected to keep it from going the distance.

The anticipated sale price, estimated to be between $1.7 billion and $1.8 billion, would be a “reach” for Clear Channel, which is also preoccupied with other acquisitions such as its bid for U.K. outdoor advertising concern Moore Group, Wall Streeters said.

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