Tribune to Buy Local TV Group for $2.7 Billion

Tribune Buy Local TV Group $2.7

Deal would expand Tribune's local station holdings from 23 to 42, creating one of biggest U.S. TV station groups

Tribune Co., doubling down on the broadcast television biz, announced an agreement to acquire Local TV Holdings’s 19 TV stations in 16 key markets for $2.725 billion in cash — a deal that would make Tribune one of the biggest TV station owners in the U.S.

With the deal, Tribune’s local TV footprint will increase from 23 to 42 stations across the U.S., in markets including New York, Los Angeles, Miami and Seattle. Chicago-based Tribune emerged from Chapter 11 bankruptcy last year.

Deal comes less than three weeks after Gannett Co. announced $2.2 billion acquisition of Belo Corp., similarly expanding Gannett’s station count from 23 to 43.

Tribune said the bigger scale will give it new opportunities for national and local advertising, and also lead to “more meaningful conversations” with cable, satellite and telco TV providers about distribution. Company said it hopes to expand reach of WGN America and the announcement also signals that Tribune plans to more aggressively seek higher retransmission fees.

“This is a transformational acquisition for Tribune,” Peter Liguori, Tribune prexy and CEO, said in a statement. “It makes us the No. 1 local TV affiliate group in America, expands the distribution platform for our high-quality video content, and extends the reach of our digital products to new audiences across the country.”

Liguori, previously Discovery Communications COO and head of entertainment at Fox Broadcasting, joined Tribune in January 2013 with a strategy of bulking up the company’s TV portfolio.

Local TV is principally owned by Oak Hill Capital Partners. The transaction has been approved by the boards of both companies and is expected to close by the end of 2013, subject to antitrust and Federal Communications Commission approvals and other closing conditions.

Tribune’s deal for Local TV would be largest since its $8 billion merger in 2000 with Times Mirror, whose assets included the Los Angeles Times.

Post-transaction, Tribune’s broadcast portfolio would include 14 CW affiliates, 14 Fox affiliates, five CBS affiliates, three ABC affiliates, two NBC affiliates and four independents. Tribune will own 14 stations in the country’s top 20 markets and will become the top Fox affiliate group. Local TV will give Tribune additional stations in markets including Denver, Cleveland, St. Louis, Kansas City, Salt Lake City and Milwaukee.

According to Tribune, the deal will generate “significant” free cash flow and be immediately accretive to earnings. Tribune anticipates the combination with Local TV will result in more than $100 million in annual run-rate synergies within five years after closing.

SEE ALSO: Tribune’s Peter Liguori Making Good on Vow to Beef Up TV Assets

In addition to local TV stations, Tribune’s properties include superstation WGN America — currently distributed to about 70 million U.S. households — as well as Tribune Studios, Tribune Digital Ventures and its eight major-market newspapers, including the Chicago Tribune and L.A. Times.

Tribune will finance deal through a combination of debt financing and a portion of its cash on hand. Company said it has received committed financing of up to $4.1 billion from JPMorgan Chase, BofA Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse. That includes a new $300 million revolving credit facility and the capacity to allow Tribune to refinance its existing debt.

Tribune said the deal for Local TV is being structured to deliver a step-up in the tax basis of the acquired assets. According to the companies, the effective purchase price multiple on a pro-forma basis is approximately seven times 2011 and 2012 average EBITDA (earnings before interest, tax, depreciation and amortization).

Guggenheim Securities acted as financial advisor to Tribune, and Debevoise & Plimpton and Covington & Burling acted as legal advisors to Tribune on the transaction. Moelis & Co., Wells Fargo Securities Deutsche Bank Securities were financial advisors to Local TV, and Dow Lohnes acted as legal advisors.

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  1. jamesjimcie says:

    Tribune would turn KDVR into a CW station and could sell it directly to CBS as a owned and operated station and form a duopoly with KCNC while Tribune keeps KWGN and turns into a FOX station. Tribune would turn KTVI into a ABC station and KPLR getting turn into a FOX station and could sell it to either FOX as a owned and operated station or Nexstar owning it and running it as a FOX affiliate of their own with KDNL turning into a CW station under Sinclair ownership and control. Tribune would turn WGHP into a ABC station with WXLV turning into a FOX station under Sinclair ownership and control while WGHP could enter a JSA/LMA/SSA with soon to be Lockwood owned WCWG as a partner for launching newscasts. WHNT could enter a JSA/LMA/SSA with Lockwood owned WHDF as a partner for launching newscasts.

    I would rather see Gannett spinning off KASW, KMSB/KTTU, and KMOV to Meredith and combined the operations of KASW with KPHO, and spinning off KTVK, and WHAS to Scripps and combined the operations of KTVK with KNXV with ABC moving to KTVK and KNXV becomes independent for competitive reasons and a very true win-win situation for Gannett, Meredith, and Scripps in Phoenix. Tribune would turn KTVI into a ABC station and KPLR getting turn into a FOX station and could sell it to either FOX as a owned and operated station or Nexstar owning it and running it as a FOX affiliate of their own with KDNL turning into a CW station under Sinclair ownership and control for competitive reasons and a very true win-win situation in Saint Louis.

    Disney could fully buy WJLA from Allbritton and turn it into a full ABC O&O station in Washington DC. I would be okay with Hearst getting KTUL, KATV, WCIV, and WSET with Nexstar getting WHTM and Sinclair transferring the license of WLYH to Cunningham/Deerfield and continue to fully owned WHP, and with Sinclair getting the combined WBMA LD/WJSU/WCFT with the intent of using the the combined WBMA LD/WJSU/WCFT to program FOX on it’s DT1 channel and MYNET on it’s DT2 channel while WABM continues to program MYNET on it’s DT1 channel and add FOX on it’s DT2 channel. Sinclair keeps the CW affiliation on WTTO and WDBB. Sinclair could transfer the license of WTTO and WDBB to Cunningham and WABM to Deerfield while Sinclair fully owns the combined WBMA LD/WJSU/WCFT combo or Raycom could buy the combined WBMA LD/WJSU/WCFT combo and place it under the control of American Spirit Media with the intent to move the FOX affiliation there on it’s DT1 channel with WBRC rejoining the ABC Network on it’s DT1 channel. The combined WBMA LD/WJSU/WCFT combo would air WBRC on it’s DT2 channel or all of it’s programming 24/7 with ABC is transferred and switched onto WBRC while WBRC would air the WBMA LD/WJSU/WCFT combo on it’s DT2 channel or all of it’s programming 24/7 with FOX is transferred and switched onto the WBMA LD/WJSU/WCFT combo.

  2. Delta Vee says:

    You’re INCORRECT – Tribune has owned stations in Denver & St. Louis for several years.

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