Gray, Raycom To Combine, Creating Third Biggest Station Group - TvTechnology

Gray, Raycom To Combine, Creating Third Biggest Station Group

Deal valued at $3.6 billion
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ATLANTA and MONTGOMERY, ALA.—Gray Television and Raycom Media have agreed to combine their companies, creating the third largest TV station group with 142 full-power TV stations in 92 markets that reaches 24 percent of U.S. television households, the companies announced this morning.

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The merged company will have 165 ABC, NBC, CBS and Fox affiliates under its umbrella as well as more than 100 CW, MyNetwork and MeTV affiliates. In all, the transaction will account for nearly 400 program streams.

Gray will combine with Raycom for $3.647 billion in proceeds --$3.547 billion enterprise value and $100 million of Raycom cash, according to an online presentation laying out the deal given this morning. The net revenue of the combined company on a blended 2016/2017 basis totals about $2 billion, it said.

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Gray shareholders will retain 89 percent economic ownership. Gray’s chairman, president and CEO Hilton Howell will become executive chairman and co-CEO of the combined company.

Raycom president and CEO Pat LaPlatney will join Gray as director, president and co-CEO. Raycom’s former president and CEO Paul McTear will join Gray’s board of directors.

Raycom and Gray will divest or swap TV stations in nine markets with overlapping station ownership, according to the presentation. FCC approval is required and is anticipated in the fourth quarter of 2018, it said.

[Read: Gray Buying KDLT-TV Sioux Falls]

The transaction has already been unanimously approved by the boards of directors of both companies and has received approval from Raycom shareholders. No Gray shareholder vote was required, it said.

Other Raycom assets are part of the deal, including Raycom Sports, a marketing, production and events management and distribution company; Tupelo Raycom, a sports and entertainment production company; RTM Productions, an automotive programming production and marketing solutions company; and Broadview Media, a post-production and digital signage company. The deal excludes CNHI newspapers and PureCars, which Raycom will sell or spin-off.

According to the presentation, the combined company is expected to realize annual synergies of $80 million in its first year, including $15 million in net retransmission revenue; $40 million in corporate and station-level expenses; about $15 million from elimination of third-party vendors; and about $10 million in cost savings on technology and digital operations as well as ending redundant contracts.

Gray also announced other personnel moves that will become effective July 1. They include Bob Smith, who will become COO; Nick Waller, Chief Administrative Officer.

The combined entity will be the third largest station group behind Nexstar Media Group and Sinclair Broadcast Group. With 24 percent coverage of U.S. TV households, the combined company has room to grow before reaching the FCC’s 39 percent national household cap, the presentation said.