Tuesday, May 9, 2017

Chicago Radio: Trib Media Sale Will End Local Ownership of WGN

By Liana B. Baker and Rishika Sadam

(Reuters) -- Sinclair Broadcast Group Inc said on Monday it would buy Tribune Media Co, one of the largest U.S. television station operators, for about $3.9 billion, giving Sinclair a greater foothold in big broadcast markets like New York and Chicago.

Shares of Tribune, which operates 42 U.S. television stations, rose 5.2 percent to $42.42. Sinclair shares fell about 3 percent to $35.90.

A recent U.S. Federal Communications Commission vote to reverse a 2016 decision limiting the number of television stations some broadcasters can buy helped pave the way for the deal.

Sinclair may still have to sell certain stations such as St. Louis and Salt Lake City in order to comply with FCC regulations, Chief Executive Chris Ripley said on a conference call.

The sale will mark the end of a long road for Tribune, whose name was long intertwined with the city of Chicago, where the Chicago Tribune newspaper was founded more than 150 years ago. The company once owned the Chicago Cubs baseball team.

The sale comes after a decade of turmoil for the company, which was acquired by real estate mogul Sam Zell and then by private equity firms. It emerged from bankruptcy in late 2012 and completed a spinoff of its newspaper assets in 2014 into a company now known as Tronc Inc.

Wells Fargo analyst Marci Ryvicker said the deal's biggest cost savings will come from retransmission fees, which are the payments station groups like Sinclair make to broadcasters such as Fox, CBS and NBC to carry their programming.

Tribune's portfolio would help expand Sinclair's already vast network of 173 stations in 81 U.S. markets and marks the largest acquisition for the Baltimore-based company.

Sinclair also gets WGN 720 AM, cable network WGN America and a stake in the Food Network, a joint venture between Tribune and Scripps Network Interactive Inc (SNI.O).

In addition to Sinclair, Twenty-First Century Fox Inc and Nexstar Media Group Inc had considered an acquisition of Tribune, Reuters has reported.

The combined company could have more leverage in negotiations with Fox since it will own a large chunk of Fox broadcast affiliates around the country.

The $43.50 per share offer represents a 26 percent premium over Tribune's closing price on Feb. 28, a day before Reuters broke the news that Sinclair had approached Tribune about an acquisition.

Tribune stockholders will receive $35 in cash and 0.23 share of Sinclair stock for each Tribune share. Sinclair will assume about $2.7 billion in debt in the deal, which is expected to close in the fourth quarter.

Assuming there are no federal approval battles for Sinclair, the deal should close by the end of 2017.

Tribune Media had been in serious talks with Sinclair for at least six months, although Tribune Media frequently denied it was for sale. Other companies that had been looking to purchase Tribune Media in recent months included FOX Television (21st Century Fox), Nexstar, Meredith Corporation, and a consortium of well-known television investors/buyers. In the end, Sinclair pushed the hardest for the sale and won it.

After Tribune Media President and CEO Peter Liguori was forced out from the company in March with no replacement named, it became very clear that the Tribune Media Board of Directors, made up largely of creditors and debtors, were looking to sell the company as quick as possible.

No comments:

Post a Comment