Broadcast group back in deal mode as station prices drop
The price is right for Sinclair Broadcast Group to get back into station acquisition mode. The company on Wednesday unveiled a deal to buy eight mid-sized market TV stations from Irvine-based Freedom Communications for $385 million.Sinclair’s pact with Freedom comes on the heels of its $200 million deal inked last month to buy seven stations from Four Points Media, an affiliate of private equity giant Cerberus Capital Management. The Freedom and Four Points acquisitions were attractive to Sinclair because the station were available at a relatively low price and they will boost the company’s market share by giving it multiple stations in markets including West Palm Beach, Fla., and Albany, N.Y., according to Sinclair chief financial officer David Amy. Although local stations in small- and mid-sized markets have been through a rough few years amid broader economic turmoil, Sinclair remains bullish on broadcast — as to be expected from one of the nation’s largest station owners. Amy said the additions of the Freedom and Four Points stations would drive 40% growth in the company’s free cash flow. Sinclair is known for its skill at squeezing top profit margins out of its stations, especially in markets where it owns more than one. Baltimore-based Sinclair stayed mostly on the sidelines about five years ago when private equity players like Cerberus began snapping up TV stations at much higher multiples than Sinclair is paying now. “It didn’t make sense for us to go out and compete against the private equity guys. We said at the time, ‘Wait five years, you’ll see us acquiring again.’ “ Freedom’s sale of its broadcast properties had been expected after the company completed its bankruptcy reorg last year. Freedom owns 27 daily newspapers, including the Orange County Register, among other print and digital publications. The other Freedom markets are Chattanooga, Tenn., Medford, Ore., Beaumont, Texas and Grand Rapids and Lansing, Mich.