In a deal worth $425 million in cash, Fox Entertainment Group and Fox Television stations have acquired Chicago television station WPWR from Newsweb Corp., gaining a second station in the nation’s third-largest market.
Fox already owns and operates Fox-affiliated WFLD Chicago.
With the acquisition, Fox will have duopolies in nine markets, including the top three — Gotham, Los Angeles and the Windy City.
Deal is expected to close in the fourth quarter.
UPN-affiliated WPWR has long been sought after as station groups grew bigger in recent years by snatching up independently held outlets — such as WPWR — across the country.
“This is an important acquisition for the station group in one of the nation’s biggest and most vibrant television markets — particularly at a time when we are seeing a distinct recovery in the advertising market,” said Mitchell Stern, chairman-CEO of Fox Television Stations, in a statement. “Having a second station in the Chicago market will provide our local and national advertisers with an enormous audience and an array of advertising choices.”
Newsweb owns one other station, Denver’s UPN affil KTVD. Fox has a station in that market, O&O KDVR.
“The acquisition of WPWR continues our strategy of creating duopolies in major U.S. television markets,” said Lachlan Murdoch, News Corp.’s deputy chief operating officer, in a statement.
“In those markets where we already operate two stations, we’ve started to see the benefits of our duopoly strategy in the form of increased profit margins, better-quality news and entertainment for viewers and improved offerings to advertisers,” Murdoch added.
“Relative to what Viacom paid,” for KCAL Los Angeles, “it seems like a fair market price,” said Peter Mirsky, an analyst at SG Cowen Securities, who has a “strong buy” rating on Fox and doesn’t own any shares.
Viacom completed its acquisition of independent Los Angeles broadcaster KCAL from Young Broadcasting for $650 million in cash in May. Viacom, which also owns CBS O&O KCBS Los Angeles, gained a duopoly in that market as a result (Daily Variety, May 16).
“I don’t think there is any argument with the logic and that they can get a great return out of it over time,” Mirsky said.
(Bloomberg contributed to this report.)