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Hearst Moves to Buy Back TV Stock

NEW YORK: Hearst Corp. announced today it would make a tender offer for all of the outstanding shares of Hearst-Argyle TV that it doesn’t already own. Hearst now holds about 67 percent of Hearst-Argyle’s (NYSE: HTV) Class A shares, and all of the Class B shares. The parent company is offering $4 a share, more than double of what the stock has been trading for over the last few weeks.

HTV comprises 29 TV stations reaching 18 percent of the U.S. audience. The group posted 2008 revenues of $720.5 million, down about 5 percent from 2007. Net loss was $516.5 million after impairment charges of $940 million.

The offer was issued to HTV shareholders in a letter dated today. It said a similar offer was proffered in the fall of 2007, but no agreement was reached. The Hearst board decided to take another crack at it, given the economic climate for TV stations.

“The substantial recent changes in the financial markets, as well as in the media markets in which Hearst-Argyle operates have focused our attention on Hearst-Argyle’s capital structure, its relatively high level of indebtedness, and its ability to refinance its debt on acceptable terms as it matures,” the letter stated. “We believe that if Hearst-Argyle were a wholly owned subsidiary of Hearst, it would more readily be able to navigate the troubled waters in which we find ourselves.”

HTV’s largest institutional shareholders, Private Capital Management of Naples, Fla., is on board with the deal. PCM holds more than 7 million shares.

The price of HTV shares immediately shot up on the news, from around $2 to a high of $4.39 in Wednesday trading. -- Deborah D. McAdams