Gray Television Inc. has agreed to buy fellow television-station owner Raycom Media Inc. in a $3.65 billion deal that would create a company that reaches nearly a quarter of U.S. TV households.
The Wall Street Journal reports the move comes amid consolidation in the TV industry as station owners look to increase their leverage with broadcast networks, which supply much of their programming, and pay-TV distributors, which carry their channels.
Gray estimates it will be able to save $40 million in the first year after the deal closes by reducing station and corporate expenses. It also expects revenue to increase by $15 million, as Raycom’s contracts convert to Gray’s rates.
The industry is also grappling with increasing numbers of cord-cutters, viewers who are canceling their cable-TV subscriptions and are watching online videos and using streaming services.
Consolidation in the industry is also fueled by Sinclair Broadcast Group Inc.’s pending acquisition of Tribune Media Co. , which would create the largest station owner.
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If the Gray-Raycom deal is completed, the combined company would own 142 television stations in 92 U.S. markets, reaching 24% of TV households and owning the third-largest number stations. A combined Sinclair and Tribune, meanwhile, is expected to reach 62% of households across 102 markets. Nexstar Media Group Inc. reaches 39% of U.S. television households in 100 markets.
Gray is buying Raycom for $3.65 billion in total proceeds, including $2.85 billion in cash, $650 million in preferred stock and 11.5 million shares of Gray stock, valued at $147.2 million Friday. Raycom is employee-owned.
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