Report: Private Equity Firms Are Circling Local TV Owners

Apollo Global Management, Providence Equity Partners and Blackstone Group LP are among the private equity firms reported to be interested in acquiring local TV assets, according to CNBC citing people familiar with the matter.

Their targets could include Nexstar Media Group, Tribune Media, Sinclair Broadcast Group and 14 stations being sold by Cox Enterprises, said the people, who asked not to be named because the discussions are private. No deals are imminent, cautioned the people.

Local TV stations are prime targets for private equity buyouts because they are reliable cash generators that require little capital expenditure. This allows buyout firms to put a lot of debt on the companies and deleverage quickly. 2018 should be a strong year for the industry driven by midterm election political advertising.

Apollo has already approached Nexstar about an acquisition, Reuters reported on July 11. Since that initial approach, Sinclair's acquisition of Tribune Media collapsed after the Federal Communications Commission blocked the deal.

That's led Nexstar, which has an enterprise value of nearly $8 billion, to consider buying instead of selling, according to people familiar with the company's thinking.

Sinclair is also more likely to be a buyer than a seller, said the people. Still, private equity firms have expressed interest in buying a stake in Sinclair, if not the whole company, which has about $1 billion in cash on its balance sheet. Sinclair may be forced to look for a cash infusion if it loses a $1 billion lawsuit that Tribune filed alleging breach of contract. (The lawsuit came after the FCC killed the deal, claiming Sinclair purposefully sold divestitures at below-market prices to entities with close ties to CEO Scott Smith in an effort to gain regulatory approval.)

Tribune and the Cox stations are the first assets that will likely sell, two of the people said.