Tegna and the E.W. Scripps Co. have made deals to acquire TV stations made available by Gray Television’s acquisition of Raycom Media.
Tegna bought WTOL-TV, the CBS affiliate in Toledo, Ohio, and KWES-TV, the NBC station in Odessa/Midland Texas, for $105 million in cash from Gray.
“WTOL and KWES are strong, leading local media brands, with deep roots in their community. They are an excellent strategic and financial fit with our portfolio,” said Dave Lougee, president and CEO, Tegna. “As we’ve seen with the results of our recent acquisition of KFMB in San Diego, Tegnahas a proven track record of acquiring highly attractive assets that create value for shareholders. We continue to invest in growth and remain well positioned to capitalize on consolidation opportunities that are both strategic and financially prudent.”
The transaction, structured as an asset purchase, “represents a compelling purchase price multiple of 5.0 times expected average 2017/2018 EBITDA, including run rate synergies and net present value tax savings in the high-teen millions (or 5.9 times, prior to tax savings),” according to Tegna.
The company expects the transaction to be accretive to EPS in less than a year after close and immediately accretive to free cash flow. Tegna will finance the transaction through the use of available cash and borrowing under its existing credit facility. The transaction will have no material impact on Tegna’s leverage.
Scripps agreed to acquire two ABC affiliates in Florida and Texas owned by Raycom Media for $55 million. The stations are KXXV/KRHD-TV in Waco, Texas and WTXL-TV, Tallahassee, Fla.
Scripps has sold off its radio division for $83.5 million in order to focus on core assets, including its TV business.
“Scripps’ acquisition of these two stations is in line with the strategic vision we set out early this year: to strengthen our portfolio of local television stations while delivering value to shareholders,” said Scripps CEO Adam Symson. “In addition to expanding our household reach and deepening our strong relationship with ABC, this transaction expands our political footprint in key battleground states leading up to the 2020 elections.”
The deal gives Scripps 17 ABC affiliates.
The transaction is structured as a purchase of assets, and it will be funded with cash on hand; no debt financing will be required. It is expected to be accretive to earnings in the first full year Scripps operates the acquired stations.