Longtime Bridesmaid Meredith ‘Altars’ Strategy - Broadcasting & Cable

Longtime Bridesmaid Meredith ‘Altars’ Strategy

M&A playbook pivot for broadcaster; $407 million deal for Belo trio of stations may be only the first move
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Meredith picked up a tidy $400 million Christmas present late last month, and the group hopes its new strategy regarding acquisitions will be the gift that keeps on giving. A self-described “bridesmaid” in several station group auctions the past few years, Meredith is more typically bypassing that process with pre-emptive approaches to groups about parting with a station or two. Paul Karpowicz, Meredith Local Media president, is hoping for another match similar to what he got in KMOV St. Louis and KTVK-KASW Phoenix.

“We’d been out there and been active, and just not had a lot of success,” said Karpowicz, mentioning auctions involving Local TV, Newport Television and McGraw-Hill stations. “It gets to be very frustrating. But now we’re taking a different tack with active discussions, and we continue to have them with other groups to see if there’s another perfect fit.”

Finding a Match

On Dec. 23, Meredith announced it agreed to acquire KMOV, KTVK and KASW from Gannett and Sander Media, which had acquired the stations from Belo and could not keep them due to regulatory restrictions. The $407.5 million deal awaits FCC approval. Stephen M. Lacy, Meredith chairman/ CEO, called the trio “high-performing stations”; Phoenix is a fast-growing market, he noted, while St. Louis gives Meredith’s KCTV-KSMO Kansas City a regional mate.

“Two top 25 markets— it’s very rare to have stuff like that come up,” said Larry Patrick, managing partner at station brokerage Patrick Communications, who called it a “wonderful” deal for Meredith.

Meredith forecasts $105 million to $115 million in combined revenue for the incoming stations in the first year after closing. KTVK is an independent with a robust news operation. Meredith owns CBS affiliate KPHO in Phoenix and will sell KASW, a CW affiliate, to SagamoreHill Broadcasting while providing services to the station. As Lacy stated, Phoenix is rapidly growing, gaining more than 43,000 TV homes from 2012-13 and moved up one spot to No. 12 in the Nielsen DMA rankings.

“Who doesn’t want to be in Phoenix?’” Patrick said.

KMOV won several key adults 25-54 races in the November sweeps. “KMOV grew a strong newscast under Belo, while KSDK’s news operation has seemed increasingly threadbare after years of Gannett cost-cutting,” said Gail Pennington, St. Louis Post-Dispatch TV critic.

St. Louis holds special meaning for Karpowicz; his father, Ray, was general manager of KSDK for 25 years. Paul essentially grew up at the station and has spoken fondly of appearing on the local Romper Room program several times as a boy. Warm childhood memories aside, the broadcast chief says the to-be-acquired stations are emblematic of what Meredith is shopping for as it approaches other station groups: No. 1, or at least highly competitive, news outlets in good-sized markets, and ideally, a CBS affiliation. “They fit the exact profile that we’ve talked about for a long time,” Karpowicz said.

St. Louis is about 250 miles east of Kansas City along I-70, opening up synergies for Show Me State CBS affiliates KMOV and KCTV. Meredith headquarters, meanwhile, is in Des Moines, Iowa. “Geography still matters, especially if you believe in hyperlocal content,” said Bill Hague, senior VP at Frank N. Magid Associates. “Meredith gets the Midwest.” (Magid consults on behalf of KMOV and Meredith.)

Recipe for Homegrown Hits

Karpowicz approached Gannett brass well before the Justice Department raised issues with the St. Louis-Phoenix piece of Gannett’s $2.2 billion Belo deal. Easing the negotiation was the fact that Karpowicz and Dave Lougee, Gannett broadcast president, have served on boards together, including the NAB’s, and have familiarity with and respect for one other.

As Meredith grows, the group’s leadership is pondering some unique homegrown programming options. Karpowicz is keen to hatch a show related to Meredith’s $175 million AllRecipes.com acquisition two years ago, and will test the concept with segments in its syndicated Better program. “We took AllRecipes.com from digital to print, and it would be pretty cool to take it to a half-hour or hour show,” he said.

Karpowicz would not reveal which groups Meredith is approaching about cutting loose a station or two or three, but he is bullish on the new strategy. “We’re out there and we’re visible,” he said. “When you let people know you’re still in the marketplace, good things can happen.”

BELO VET PETER DIAZ LANDS KEY SPOT IN GANNETT LEADERSHIP TEAM

Peter Diaz, the well-regarded former president of media operations for Belo, is taking on an executive VP role with Gannett following the closing of its $2.2 billion Belo acquisition. Lynn Beall, president and general manager of KSDK St. Louis, holds an executive VP title at Gannett as well.

Dunia Shive, former Belo president and CEO, is assisting with the transition but was not named to the Gannett executive team. She also has resigned her position on the NAB board.

Dave Lougee, president of Gannett Broadcasting, welcomed the Belo ex-pats to the Gannett fold in a company meeting. “Having had the unique privilege of working for both Gannett and Belo, I can tell you firsthand that we are a perfect cultural and strategic fit,” he said.

Belo veteran Angela Betasso is VP of sales, while Dan Lyons is VP of sales strategy. Gannett vet Rob Mennie is senior VP of news and content, while former Belo VP of news Michael Valentine brings that title over to Gannett. Among Gannett’s other promotions, Mark Cornetta was named senior VP.

Meredith picked up a tidy $400 million Christmas present late last month, and the group hopes its new strategy regarding acquisitions will be the gift that keeps on giving. A self-described “bridesmaid” in several station group auctions the past few years, Meredith is more typically bypassing that process with pre-emptive approaches to groups about parting with a station or two. Paul Karpowicz, Meredith Local Media president, is hoping for another match similar to what he got in KMOV St. Louis and KTVK-KASW Phoenix.

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