FCC approves $7.2bn Nexstar deal

December 2019 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

December 2019 Issue

Nexstar Media Group has completed its acquisition of Tribune Media Company for $7.2bn, including debt, following the announcement that the Federal Communications Commission (FCC) approved the sale.

As a result of the deal, Nexstar is now the largest owner of local television stations in the US. The new company’s 197 stations in 115 markets will reach 39 percent of US TV households, the maximum reach allowed for a single owner under federal regulations. Accordingly, in order to comply with TV ownership rules and receive the FCC’s blessing, Nexstar has agreed to divest 21 of its local TV stations for approximately $1.33bn, inclusive of a purchase price adjustment for two Indianapolis stations sold to Circle City Broadcasting. The stations were divested to Tegna, E.W. Scripps and Circle City.

FCC approval was the last major regulatory hurdle for this deal, after the Department of Justice gave its assent to the deal in July. The FCC released a statement announcing its approval, noting that the deal would provide “several public interest benefits to viewers of current Tribune and Nexstar stations. For example, viewers would benefit from their local stations having increased access to Nexstar’s Washington, DC, news bureau and state news bureaus. Additionally, Nexstar demonstrated that it would invest savings resulting from the merger into its stations, including investments in ATSC 3.0, the next-generation television broadcast standard.”

Under the terms of the deal, Nexstar acquired all outstanding shares of Tribune Media for $46.687397 per share in cash. That includes about $0.187397 per share to reflect the final closing date, which came three weeks after the original target of 31 August.

Nexstar said it expects to achieve about $185m in operating synergies in the first year, which is a higher tally than the $160m it had previously estimated.

“The completion of our accretive acquisition of Tribune Media increases Nexstar’s geographic diversity and audience reach with national coverage and an expanded presence in top 50 DMAs, while offering complementary media assets and investments, scale driven synergies and further cash flow diversification,” said Perry Sook, chairman, president and chief executive of Nexstar.

He continued: “Nexstar Media Group is now the nation’s leading creator and distributor of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms based on U.S. TV household reach with pro-forma 2018/2019 average annual revenue of approximately $4.3 billion. Today, Nexstar produces over 254,000 hours of local news and content annually with plans to expand our local programming over the coming year. With 197 full power, owned or serviced, television stations in 115 markets, consistent, high margin contributions from its TV Food Network ownership stake, positive cash flow from the national cable network WGN, growing digital media operations, and the onset of 2020 political spending, Nexstar is entering its next growth cycle. Our platform expansion elevates Nexstar’s ability to deliver superior engagement across all devices, including large-scale reach to online users as combined active users of Nexstar and Tribune Media websites would be the nation’s top site for news and information as ranked by Comscore.”

“We’re very pleased with today’s decision by the FCC, which enables us to clear the last remaining regulatory hurdle in our path,” said Peter Kern, chief executive of Tribune Media Company. “We look forward to closing our transaction with Nexstar very soon.”

Sean Compton, formerly head of programming for Tribune Broadcasting, will serve as executive vice president of WGN America, WGN Radio and director of content acquisition. Dana Zimmer will serve as executive vice president and chief distribution and strategy officer. Gary Weitman will serve as Nexstar’s executive vice president and chief communications officer.

Nexstar and Tribune initially agreed to a merger in December 2018, around four months after Tribune’s proposed merger with Sinclair Broadcast Group fell apart, partly because of the heavy regulatory scrutiny on the transaction and Sinclair’s aggressive approach with the FCC to handling divestitures.

Richard Summerfield