Gray-Raycom Merger Spawns Station Acquisitions

TEGNA will acquire stations in Ohio and Texas, and E.W. Scripps is buying Texas and Florida stations
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MCLEAN, Va., and CINCINNATI — TEGNA this week announced it will acquire Gray Television stations in Toledo, Ohio, and Odessa-Midland, Texas, for $105 million in cash, and E.W. Scripps said it would buy stations in Waco, Texas, and Tallahassee, Fla., from Raycom Media for $55 million.

In June Gray and Raycom announced they were combining their broadcast groups and that as part of the deal Gray would sell WTOL, the CBS affiliate in Toledo, and KWES, the NBC affiliate in Odessa-Midland. TEGNA’s acquisition of the stations is contingent on the close of the Gray-Raycom merger, TEGNA said.

[Read: Gray, Raycom To Combine, Creating Third Biggest Station Group]

E.W. Scripps is buying Raycom’s KXXV/KRHD in Waco and WTXL in Tallahassee, which also are being divested as part of the merger. The stations are ABC affiliates.

“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 President and CEO Adam Symson.

TEGNA President and CEO Dave Lougee said WTOL and KWEX are “an excellent strategic and financial fit with our portfolio.”

“WTOL and KWES are strong, leading local media brands, with deep roots in their community,” said Lougee.

The acquisition of WTOL and KWES is structured as an asset purchase being paid for through the use of available cash and borrowing under TEGNA’s existing credit facility.

The acquisition has a purchase price multiple of 5 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), the station group said.

The transaction is expected to be accretive to EPS in less than a year after close and immediately accretive to free cash flow, it added.

The acquisitions by Scripps will increase its holdings to 35 TV stations in 26 markets. The group’s reach will grow to 18.5% of U.S. TV households.

“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 Symson.

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