While duopolies are hard to come by, especially with the FCC putting joint sales agreements under its microscope, regional synergies—such as stations in Tucson and Phoenix—may be the next best thing. That’s the thinking at Scripps, which announced a merging of station groups with Journal Communications July 30.
Besides Tucson and Phoenix, the combined group, which requires regulatory approval, will include Detroit and Lansing, and Tampa, West Palm Beach and Fort Myers. The “geographic extensions,” says Brian Lawlor, Scripps senior VP, “make us better, with richer and deeper content for our viewers, and better relationships with advertisers.”
Lawlor and Scripps chairman/president/CEO Rich Boehne (pictured) stressed “deeper” relationships in the groups markets repeatedly—of building what Lawlor called a local “master brand” for consumers and advertisers. Incorporating Journal’s radio assets, which include Tulsa and Tucson, is another way for Scripps to further build local relationships. “We’ve been talking for some time about going deeper in our markets, where we have a license and a tower, a couple hundred employees and a building,” Lawlor told B&C. “We want to do as much business in that community as possible.”
Scripps is a “very picky shopper,” says Boehne, but pairing with Journal represented a “screaming good opportunity to scale up and align our interests on the newspaper side and TV side”—all in one move. The Scripps and Journal newspapers shift to a separate, publicly traded Journal Media Group.
Negotiations for the deal began in February; Boehne mentioned hopping over mounds of snow in Manhattan, en route to a little Italian restaurant near Hell’s Kitchen to discuss the marriage with his Journal counterparts. Steven Smith, chairman and CEO of Journal Communications, spoke of common values and a shared Midwestern mentality.
The deal is expected to close early in 2015. It’s a return to the Fox fold for Scripps, which had been without a Fox affiliate since the New World shakeup in the mid ‘90s. Scripps, rich in NBC and ABC affiliates, also picks up a CBS station, in local powerhouse WTVF Nashville, as the group adds Boise, Fort Myers, Green Bay, Lansing, Las Vegas, Milwaukee, Nashville, Omaha and Tucson.
Scripps and Journal brass cited $35 million in synergies from the arrangement, primarily from eliminating corporate redundancies, and said the combined company would’ve earned around $815-$830 million in 2014 revenue, including $75-85 million in political and $90-$95 million in retransmission cash.
Tim Stautberg, senior VP, newspapers for Scripps, will become president, CEO and a director of Journal Media Group upon completion of the transaction. Smith will become non-executive chairman of the board. Boehne says the print group will have “just about the cleanest newspaper balance sheet in the industry.”
Lawlor continues in his oversight role. As senior management goes over the org chart, Lawlor says he expects Debbie Turner, Journal executive VP, to continue in her own oversight role. “We clearly see her playing a big role in our company,” says Lawlor.
Unattached to its publishing division, Scripps should have more cash to invest in the product—and to consider further acquisitions.
“We’ll be a financially stronger company than before the deal,” Boehne told B&C.