UPDATED: Sinclair Grabs Freedom for $385 Million

Already huge station group continues to expand footprint
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Sinclair Broadcast Group has agreed to buy the Freedom Communications station group for $385 million. The group includes eight stations.

The deal is subject to regulatory approval, and is expected to close late in the first quarter or early in 2012.

Until that time, Sinclair will operate the stations under a local marketing agreement.

"The combination of the Freedom stations with the Four Points stations would give us two full power stations in the West Palm Beach market, which is Freedom's largest market," said David Smith, Sinclair president and CEO. "It is our intent to continue evaluating television station transactions which are accretive and where we can use our expertise and presence to improve profitability and competitive position."

Freedom put its stations, which include WPEC West Palm Beach, WWMT Grand Rapids and WRGB Albany, on the block in November 2010. The others are WCWN Albany, WTVC Chattanooga, WLAJ Lansing, KTVL Medford (Ore.) and KFDM Beaumont (Tex.).

Freedom said the deal would leave the company free from debt. "Freedom will have greater financial flexibility, allowing us to take advantage of opportunities that may arise in the future," said Mitchell Stern, president and CEO of Freedom Communications. "Our singular focus will now be on completing our transformation into a digital media company that goes beyond traditional print to take advantage of the technological innovations that will allow us to continue providing the best possible service to our readers and advertisers."

The Freedom stations made a combined $115.4 million in revenue last year, according to BIA/Kelsey's estimates. WRGB, WTVC and KFDM led their markets.

Sinclair's executives said the deal represents 6.6 times cash flow for a blended 2011-2012 for the buyer, and around a nine times multiple for the seller.

Freedom had initially asked for $400-$500 million for the group, says Sinclair EVP/CFO David Amy, but approached Sinclair recently with a willingness to negotiate. "Our pro forma brings it into line for us," says Amy. "We had not seen that opportunity in the past."

Sinclair agreed to acquire the Four Points stations for $200 million in September.

The group currently reaches 24% of the U.S. TV households. Once the Freedom and Four Points stations are factored in, Sinclair will own and operate, program or provide sales services to 73 television stations in 46 markets, reaching 26.3% of the U.S. Sinclair's television portfolio will consist of 20 Fox, 18 MyNetworkTV, 13 CW, 11 ABC, 9 CBS, 1 NBC, and 1 Azteca affiliate, in addition to 79 sub-channels.

On the heels of its combined $585 million deals, David Amy suggests Sinclair may not yet be done acquiring. "There's nothing pending, that's for sure," he says. "But we'll keep our eyes open and, if an opportunity comes up, we're not going to be shy."

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