10.03.2011 06:20 PM
Scripps to Buy Nine McGraw-Hill TV Stations for $212 Million
CINCINNATI: E.W. Scripps has agreed
to acquire the TV station group now owned by McGraw-Hill Broadcasting for $212
million. The nine stations include four ABC affiliates, rendering Scripps the
largest independent operator of ABC stations with a total of 10. The deal
brings Scripps’ station count to 19.
The deal is structured as a purchase of stock but will be treated as a purchase
of assets for tax purposes, resulting in tax deductions created through the
transaction that will be used by Scripps to reduce the net cash cost of the
acquisition. The transaction is expected to be modestly accretive to Scripps’
earnings in the first full year of operations of the acquired stations.
Scripps said that because of the low interest rates currently available, it
intended to finance the transaction with new debt, and has secured committed
financing for the purchase price. Electing a debt-financed purchase allows
Scripps to preserve its financial flexibility. The company had $153 million in
cash on its balance sheet as of Aug. 31, 2011.
The McGraw-Hill stations included in the transaction comprise four
ABCs--KMGH-TV in Denver, WRTV-TV in Indianapolis; KGTV-TV in San Diego, Calif.;
and KERO-TV in Bakersfield, Calif. The remaining five are low-power stations
affiliated with Azteca America, giving Scripps an entree into the Spanish-language
market. The LPTVs include KZSD in San Diego, KZKC in Bakersfield, KZCO in
Denver, KZFC in Ft. Collins, Colo., and KZCS in Colorado Springs, Colo.
“This is a terrific opportunity to enter some of America’s most dynamic media
markets and tap into the growing Spanish-language marketplace at a very
attractive price,” said Rich Boehne, Scripps president and CEO. “The
McGraw-Hill stations fit well with our strategy to create economic value
through high-quality news and information content that serves both consumers
and advertisers through linear television and the exploding array of digital
The new stations join a Scripps’s portfolio that includes six ABC affiliates in
Detroit, Cleveland, Phoenix, Cincinnati, Baltimore and Tampa, Fla.; three NBC’s
in West Palm Beach, Fla., Kansas City, Mo.; and Tulsa, Okla.; and one
independent station in Lawrence, Kan. The consolidated station group will reach
approximately 13 percent of U.S. households.
“We’ve looked at several recent opportunities, but the McGraw-Hill stations
were the first ones that truly energized our management team,” said Brian Lawlor,
Scripps senior vice president of television. “The culture at these stations will fit well with
The transaction is subject to regulatory approvals and customary closing
~ Deborah D. McAdams