Deal to hand off to Ackerley Group
NEW YORK — Sinclair Broadcast Group announced an agreement Tuesday to buy the seven television stations of Guy Gannett Communications for $310 million in cash, then turn around and sell Guy Gannett’s Rochester property to the Ackerley Group for an undisclosed amount.
Sinclair, which already owns a Rochester station, will retain the remaining six outlets, consisting of one ABC affiliate (Springfield, Mass.), two CBS affils (Portland, Maine, and Cedar Rapids, Iowa) and three NBC affils (Tallahassee, Fla., and two simulcasts in Champaign and Springfield-Decatur, Ill.).
Sinclair’s designated CEO Barry Baker noted that the acquisition’s multiple of 12.6 times projected 1999 broadcast cash flow — or earnings before interest, taxes, depreciation, amortization and overhead — was lower than those recently recorded in the industry. He also said he expected the transaction to “be accretive,” or add to after-tax cash flow, in 1999.
Lehman Brothers analyst Tim Wallace called the deal “a reasonably good acquisition” that furthered Sinclair’s strategy to join America’s largest broadcast groups.
The analyst added that he expected TV stations do “quite well” whether or not the general economy slides into a recession. “A lot of broadcasting stocks have been oversold in fear of an economic slow-down,” he said.
On completing all pending transactions, Sinclair will own 64 TV stations and 51 radio stations. Its TV coverage will then extend to nearly a quarter of the country, while its radio holdings will place it among the country’s top 10.
Guy Gannett is a family-owned company unrelated to the Gannett Co., the country’s largest newspaper publisher, which also owns TV stations.
Last week, Guy Gannett sold its newspaper and nonbroadcast properties to the Seattle Times Co.
To pay for the Guy Gannett TV deal, Sinclair said it expected to draw bank borrowings and perhaps is-sue additional debt or equity securities. The Baltimore-based company’s stock gave up 31¢ a share Tuesday to close at $18.13.