Tribune Takes 19 Local TV Stations for $2.7 Billion

CHICAGO and NEWPORT, KY.— Tribune Co. is buying 19 Local TV LLC stations for $2.752 billion. The transaction will bring Tribune's total to 42, including stations in New York and Los Angeles, the country’s two largest markets.

Tribune’s broadcast portfolio will include 14 CW affiliates, 14 Fox affiliates, five CBS affiliates, three ABC affiliates, two NBC affiliates and four independents. Tribune will own 14 stations in the country’s top 20 markets. The deal adds stations in Denver, Cleveland, St. Louis, Kansas City, Salt Lake City and Milwaukee.

Tribune anticipates the combination with Local TV will generate more than $100 million in annual run-rate synergies within five years after closing. The transaction will be structured to deliver to Tribune a step-up in the tax basis of the acquired assets. Taking into account Tribune’s estimate of run-rate synergies and the present value of this tax asset, the effective purchase price multiple on a pro forma basis is approximately 7x 2011 and 2012 average EBITDA.

Tribune has received committed financing of up to $4.1 billion from JPMorgan Chase, BofA Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse, including a new $300 million revolving credit facility and the capacity to allow Tribune to refinance its existing debt. Tribune will finance the transaction through a combination of debt financing and a portion of its cash on hand.

The transaction has been approved by the boards of both Tribune and Local TV and is expected to close by the end of 2013, subject to antitrust and Federal Communications Commission approvals and other customary closing conditions.

Guggenheim Securities acted as financial advisor to Tribune, and Debevoise & Plimpton and Covington & Burling acted as legal advisors to Tribune on the transaction. Moelis & Company LLC; Wells Fargo Securities, LLC; and Deutsche Bank Securities Inc. acted as financial advisor to Local TV, and Dow Lohnes PLLC acted as legal advisors to Local TV, on the transaction.

Local TV is principally owned by Oak Hill Capital Partners.