Continuing a dizzying trend of consolidation of the local television station business, the Tribune Company has agreed to purchase 19 television stations for $2.7 billion, making it one of the largest group broadcasters in the United States with 42 stations. [The number one independent station group is Baltimore-based Sinclair Broadcast Group, with its 87 stations.] The Tribune transaction is subject to regulatory approval and, if approved, is expected to close by the end of the year.
The latest deal comes only weeks after the Gannett Company agreed to buy 20 TV stations from the Belo Corporation for about $1.5 billion. Sinclair, still on a purchasing spree, has spent about $2 billion acquiring a hodgepodge of smaller stations in the last year and a half (in April it bought it bought 20 stations owned by Seattle-based Fisher Communications Inc.).
The new Tribune stations are located in cities such as Denver, Cleveland and St. Louis. Several of the station’s newscasts are rated second or third in their market. Bought from Local TV Holdings, a firm owned by Oak Hill Capital Partners, the stations will add to Tribune’s 23 existing properties. The deal comes as Tribune is trying to sell its newspaper properties, which include The Chicago Tribune and The Los Angeles Times.
“2013 will go down as the year of transformational consolidation, forever changing the landscape of local market television ownership and operation,” Steve Ridge, president of the media strategy group at Frank N. Magid Associates, told the New York Times.
“Nearly every group owner in the country is in overdrive this summer considering the various combinations,” Ridge said. “It is a time to gobble or get gobbled.”
The station consolidation trend comes at a pivotal time in the broadcast business. The reasons for consolidation are many — depending on the buyer or seller’s point of view.
The coming FCC spectrum auctions are expected to thin out the number of broadcast stations in the next couple of years as some broadcasters choose to sell out of the business. A general trend of television viewing moving to the Internet and the uncertain future of OTA broadcasting are also at play in what used to be a far more stable business.
The FCC’s longtime interest in all matters broadband rather than traditional broadcasting is most certainly disconcerting to many station owners, especially in smaller markets. A continuing sluggish economy has also taken a toll on some stations.
On the buyer side, those who believe OTA television has a bright future see having a larger number of stations as giving them more clout in buying programming and getting better distribution. Consolidation also gives the stations economies of scale and results in lower costs — from networked master control facilities to shared office space and reduced staff.
The future of OTA television broadcasting is unpredictable these days, and the consolidation trend is being fueled by companies placing their bets on where they see that future headed.
Peter Liguori, the new chief executive of Tribune, told the New York Times that the combination with Local TV makes his company “the No. 1 local TV affiliate group in America.”
Seven of Local TV’s 19 stations are affiliates of the Fox network, he said. Tribune already owned seven, and through the acquisition it will become the biggest holder of Fox affiliates. Tribune will also remain the biggest holder of affiliates of the CW, a small broadcast network jointly owned by the CBS Corp. and Warner Brothers.
Tribune plans to finance the deal through cash on hand and up to $4.1 billion in financing from JP Morgan Chase, Bank of America Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse. Some of the new bank debt will go toward refinancing Tribune’s existing obligations.