The stock of station operator LIN TV surged 25% Friday on heavy volume, despite an overall soggy tone in the equity markets, as investors went fishing for a bargain.
The move was a change of pace for LIN, which was battered in recent weeks as leveraged-buyout premiums are erased from the market. The stock price was already on the decline when it took a particularly hard fall last Friday, sliding 8% after fellow independent operator Nexstar Broadcasting officially took itself off the market due to the deteriorating financing environment.
Both LIN and Nexstar had put themselves up for sale earlier in the year in hopes of attracting private-equity money, but the fallout in the credit markets has sidelined LBO activity. The subtraction of Nexstar put the fate of LIN’s sale in doubt, and the two fell in tandem.
“It seems a bit oversold,” Bear Stearns analyst Victor Miller said, noting that business at LIN was still good. “Stocks rise on events and fall when those events are taken away,” Miller added.
On May 18, the stock shot up 20% to over $20 per share when news broke that it was exploring “strategic alternatives.” But it began to slide in mid-July as problems in the credit markets began to unfold, dimming the market’s hopes that the company would sell at a potentially hearty premium.
The company’s stock finished Friday up $2.84, or 25%, at $13.90 per share, a 60% retracement from this week’s low to the pre-Nexstar announcement open.
LIN confirmed Thursday that it is still exploring its alternatives but admitted that the troubled debt markets are putting a crimp in its progress.
Private-equity firms were notable suitors of broadcasting assets before the credit crunch, enticed by the prospects of cash generation from transmission fees and increased advertising revenues from the 2008 elections.