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Nexstar Picks Up Equity Station for $4 Million

Nexstar Broadcasting Group (NASDAQ: NXST) was one of few TV groups that had stock price uptick on Tuesday when the rest of the market was sliding like a drunken bovine at the Ice Capades. Nexstar got an ever-so-fleeting happy face for buying KWBF-TV, the MyNetworkTV affiliate in Little Rock, Ark., from Equity Broadcasting, the financially strapped media group headquartered in the same city. Nexstar also owns KARK-TV, the local NBC affiliate in the market.

Nexstar, based in Irving, Texas, agreed to buy the station for a mere $4 million. The stock registered a pop of 70 percent following the sale, though in dollar terms, share prices briefly went from a rather dismal $1.51 to a slightly less dismal $2.58, though it’s never been a monster share. The stock’s 52-week high has been in excess of $10; historically, it hasn’t broken through $16.

Nexstar posted income of $3.9 million on revenues of $70.7 million for 2Q, compared to a loss of $1.3 million on $68.7 million a year ago, and a loss of $100,000 on revenues of $63.7 million in 1Q. Nexstar owns and/or operates 50 TV stations, not including KWBF, in 29 markets. Shares have dropped in tandem with the wider market this year, from around $6 in May, to around $3.50 in mid-August to close at $1.57 yesterday, Oct. 8.

Nexstar intends to finance the purchase with cash on hand. Pro-forma for the transaction, the company said it expects to end 2008 with a total leverage ratio of approximately 6x compared to its permitted leverage covenant of 6.5x. The deal is expected to close in the first half of 2009, pending FCC approval.

Equity Media Holdings (NASDAQ: EMDA), meanwhile, is under a deficiency notice from the NASDAQ that could result in the delisting of its stock. NASDAQ requires companies to have a minimum of $2.5 million of stockholder equity or $35 million in market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or at least two of the last three.

Stockholder equity, as of June 30, was a deficit of $7.3 million; Equity's market value of listed securities, nearly $18 million; and it has reported net losses for the last three years. The stock in October has traded for between 25 and 55 cents. The company in August reported a net loss of around $22.8 million for the first six months of 2008, compared to a loss of $23.5 million for the same period the year before.

In June, Equity sold off its Retro TV network, a franchise designed specifically for secondary digital channels, to former Equity CEO Henry Luken III. Luken has also purchased several of Equity’s 30-odd stations. As of June 30, Equity reported having $400,000 in cash and $3.9 million subject to lender oversight.