Gray TV To Acquire Schurz Radio, TV Stations

Gray Television, Inc. announced Monday that it has reached an agreement to acquire all of the television and radio stations of Schurz Communications, Inc. for approximately $442.5 million including working capital at closing.

The addition of the Schurz stations will:

• Expand Gray’s operations to a total of 49 television markets and 28 states
• Provide Gray with the top-rated and highest grossing television stations in five additional markets
• Improve the overall quality of Gray’s portfolio of stations through continued diversification and by increasing the total count of number-one ranked television stations to 39 and the total count of number-one or number-two ranked television station operations to 48 out of our soon-to-be 49 television markets. 

“Today is a momentous day in Gray’s 118-year history,” said Hilton H. Howell, Jr., Gray’s President and CEO.

Hilton Howell Jr.

“Through the Schurz transaction, we will significantly expand the quality of our portfolio of leading television stations. We welcome more dedicated reporters, account executives, and technologists to our growing family. Quite simply, Gray’s existing stations will make the Schurz stations stronger, while the Schurz stations will make our existing stations better.”

“In a rapidly consolidating industry where size and scale matter more than ever before, we have come to the realization that Gray Television would be the best steward to ensure our stations succeed over the long-term,” explained Todd Schurz, President and CEO of Schurz.

“Gray knows how to operate top stations in small and medium-sized markets, and they have an entrepreneurial and decentralized culture,” he continued. “Moreover, Gray shares our commitment to local communities, staffs, journalistic ideals, and the broadcasting industry. Being part of a larger company with these important credentials will create more opportunities for employees and the communities that we all love.”

Schurz is a diversified and privately-owned communications company based in Mishawaka, Indiana, that owns television stations, radio stations, daily and weekly newspapers, cable companies and a telephone directory in medium and small sized markets throughout the U.S.

The company began in 1872 when Alfred B. Miller and Elmer Crockett founded the South Bend Tribune, and their descendants still own the firm today.

Schurz emerged as a broadcast pioneer in 1922 with the launching of WGAZ radio (now WSBT) in South Bend. Gray will not acquire any non-broadcast assets or businesses from Schurz.

In particular, the transaction announced Monday covers the following television and radio stations and operating agreements:

• In the Wichita, Kansas, market (DMA 65), Schurz owns KWCH-TV and three satellite stations that serve as the market’s CBS affiliate. KWCH-TV is the top-ranked and highest grossing station in the market. Schurz also owns KSCW-TV, the market’s CW affiliate, and it provides sales and other services to Entravision’s KDCU-TV, the market’s Univision affiliate. Gray already owns KAKE-TV and two satellite stations, which serve as the Wichita market’s ABC affiliates. To facilitate regulatory approval, and prior to the Gray/Schurz closing, Gray will sell KAKE-TV and its assets to another broadcaster. After such sale, KAKE-TV will be owned and operated completely independently from Gray. 
• In the Roanoke-Lynchburg, Virginia, market (DMA 69), Schurz owns WDBJ-TV, the market’s CBS affiliate, and the number-one ranked and highest grossing station in the market. Through the acquisition of WDBJ-TV, the transaction will add a third Virginia market to Gray’s portfolio.
• In the Springfield, Missouri, market (DMA 75), Schurz owns KYTV (known locally as KY3), the market’s NBC affiliate, and KCZ, the market’s CW affiliate. KY3 is the number-one ranked and highest grossing station in the market. Schurz provides sales and other services to Perkin Media’s KSPR-TV, the market’s ABC affiliate. Springfield will be Gray’s first television market in Missouri. In the South Bend, Indiana, market (DMA 96), Schurz owns WSBT-TV, the market’s CBS affiliate and the number-one ranked and highest grossing station in the market. Because Gray also owns NBC affiliate WNDU-TV in South Bend, Gray will seek another experienced television broadcaster to acquire WSBT-TV. After the closing, WSBT-TV will be owned and operated completely independently from Gray and WNDU-TV.
• In the Augusta, Georgia, market (DMA 112), Schurz owns WAGT-TV, the market’s NBC and CW affiliate. Gray owns WRDW-TV, the market’s CBS affiliate. Over time, Gray expects to consolidate WAGT-TV’s operations with Gray’s existing operations in this market. Gray anticipates that the FCC license for WAGT-TV will be offered in the upcoming FCC spectrum auction, with the proceeds from such auction, if any, payable to Gray. 
• In the Anchorage, Alaska, market (DMA 148), Schurz owns KTUU-TV, the market’s NBC affiliate. KTUU-TV is the number-one ranked and highest grossing station in the market – as well as the most-watched and highest grossing station in the state of Alaska. It will become Gray’s first television station in Alaska. 
• In the Rapid City, South Dakota, market (171), Schurz owns KOTA-TV and three satellite stations, which serve as the market’s ABC affiliate. KOTA-TV is the number one ranked and highest grossing station in the market. Gray anticipates combining KOTA-TV’s operations with those of Gray’s KEVN-TV, the market’s FOX affiliate. 

Radio Stations: 

Schurz owns the top-ranked group of radio stations in South Bend, Indiana; Lafayette, Indiana; and Rapid City, South Dakota. Like Schurz, Gray owns television stations in two of these three markets. The radio stations would have contributed less than one percent of Gray’s total broadcast cash flow in 2014 on a pro forma basis. Gray’s divestitures of KAKE-TV in Wichita and WSBT-TV in South Bend will take the form of cash sales, swaps involving comparable high-quality television stations, or a combination of cash and swaps.

Gray indicated it will begin the process of securing these divestitures immediately to minimize potential delays in the receipt of regulatory approvals for the Schurz transaction.