NEXSTAR MEDIA GROUP, INC. has closed on its acquisition of TRIBUNE MEDIA COMPANY for about $7.2 billion including assumption of debt ($46.687397 per share in cash, with $0.187397 per share added to reflect the final closing date, which followed the target date of AUGUST 31st). Also closed were the divestiture deals that sent 21 TV stations to SCRIPPS, TEGNA, and CIRCLE CITY BROADCASTING for an aggregate $1.33 billion. The deal gives NEXSTAR TV coverage of about 39% of U.S. households (pursuant to the UHF discount), plus News-Talk WGN-A/CHICAGO, the WGN AMERICA cable network, 31.3% of TV FOOD NETWORK, and other digital businesses.
Sean Compton To Oversee WGN Radio And More
In addition, TRIBUNE's SEAN COMPTON is staying on as EVP, WGN AMERICA, WGN RADIO, and Dir. of Content Acquisition, also overseeing ANTENNA TV; DANA ZIMMER is continuing as EVP/Chief Distribution and Strategy Officer; and GARY WELLMAN will stay aboard as EVP/Chief Communications Officer.
NEXSTAR has bumped its projections for first year operating synergies from $160 million to $185 million and is reiterating its pro-forma average annual free cash flow guidance for 2018-19 to about $900 million and adding pro-forma average annual free cash flow guidance for 2019-2020 of about $1.02 billion. Net leverage ratio at closing is at 4.9x with a target of reducing that ration to 4.0x by DECEMBER 31, 2020.
Chairman PERRY SOOK said, “The completion of our accretive acquisition of TRIBUNE MEDIA increases NEXSTAR’s geographic diversity and audience reach with national coverage and an expanded presence in top 50 DMAs, while offering complementary media assets and investments, scale driven synergies and further cash flow diversification. NEXSTAR MEDIA GROUP is now the nation’s leading creator and distributor of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms based on U.S. TV household reach with pro-forma 2018/2019 average annual revenue of approximately $4.3 billion. Today, NEXSTAR produces over 254,000 hours of local news and content annually with plans to expand our local programming over the coming year. With 197 full power, owned or serviced, television stations in 115 markets, consistent, high margin contributions from its TV FOOD NETWORK ownership stake, positive cash flow from the national cable network WGN, growing digital media operations, and the onset of 2020 political spending, NEXSTAR is entering its next growth cycle. Our platform expansion elevates NEXSTAR’s ability to deliver superior engagement across all devices, including large-scale reach to online users as combined active users of NEXSTAR and TRIBUNE MEDIA websites would be the nation’s top site for news and information as ranked by COMSCORE.
“Reflecting the updated guidance provided today, on a pro forma basis the TRIBUNE Transaction will result in approximately 51% growth in NEXSTAR’s stand-alone average annual free cash flow in the 2018/2019 cycle to approximately $900 million and nearly 60% growth to approximately $1.02 billion in the 2019/2020 cycle. As the largest local broadcast television group in the UNITED STATES with a diverse portfolio of valuable media assets, NEXSTAR is well positioned to compete aggressively both locally and nationwide. Given the significant free cash flow from operations we intend to immediately reduce leverage and increase our return of capital to stockholders while continuing to invest in our business and team members to improve service to viewers and advertisers. This focus, combined with our time proven operating and integration strategies will enable us to extend our strong long-term record of shareholder value creation.
"Today, the NEXSTAR team is comprised of more than 13,000 talented team members across AMERICA united by a common vision focused on localism, innovation and growth as well as a passion for professional excellence. SEAN, DANA and GARY are recognized leaders in their respective fields and we welcome them to the NEXSTAR senior management team,” said Mr. Sook. “These appointments reflect our proven integration strategy of marrying best of breed practices from our existing operations with those from acquired entities. Our long-term strategy of appointing proven broadcast and digital media leaders has driven our industry-leading innovation, distribution and core revenue growth, seamless M&A integration and enterprise-wide cost management all of which are fundamental to our consistent growth.
“NEXSTAR has a deep, capable team of operations, finance, content, digital, and legal executives and our stations are led by experienced, results-oriented broadcast executives. With the executive appointments announced today, NEXSTAR is positioned to extend our legacy of delivering exceptional service to the local communities where we operate and value to our stockholders.”
Acquired from TRIBUNE MEDIA by NEXSTAR were News-Talk WGN-A/CHICAGO as the sole radio property in the deal. NEXSTAR will be acquiring CW affiliate KDAF-TV/DALLAS; CW affiliate KIAH-TV/HOUSTON; CW affiliate KPLR-TV/ST. LOUIS; CW affiliate KRCW-TV/SALEM-KRCW-LP/PORTLAND, OR and two translators; FOX affiliate KSWB-TV/SAN DIEGO; CW affiliate KTLA (TV)/LOS ANGELES; FOX affiliate KTVI (TV)/ST. LOUIS; and FOX affiliate KTXL-TV/SACRAMENTO.
Also, FOX affiliate KDVR-TV and CW affiliate KWGN-TV/DENVER and KDVR satellite KFCT-TV/FORT COLLINS; MY NETWORK TV affiliate KXNW-TV/EUREKA SPRINGS-FORT SMITH; FOX affiliate WXIN-TV/INDIANAPOLIS and CBS affiliate WTTV (TV)/BLOOMINGTON-INDIANAPOLIS and satellite WTTK (TV)/KOKOMO; NBC affiliate KFOR-TV and independent KAUT-TV/OKLAHOMA CITY plus 19 translators; FOX affiliate KCPQ-TV/TACOMA-SEATTLE and MY NETWORK TV affiliate KZJO-TV/SEATTLE plus 6 translators; ABC affiliate WGNO-TV and CW affiliate WNOL-TV/NEW ORLEANS; and FOX affiliate WDAF-TV/KANSAS CITY.
And CW affiliate WDCW-TV/WASHINGTON; FOX affiliate WGHP-TV/HIGH POINT-WINSTON-SALEM-GREENSBORO; independent WGN-TV/CHICAGO; CBS affiliate WHNT-TV/HUNTSVILLE; NBC affiliate WHO-DT/DES MOINES; FOX affiliate WITI-TV/MILWAUKEE; FOX affiliate WJW-TV/CLEVELAND; MY NETWORK TV affiliate WPHL-TV/PHILADELPHIA; and CBS affiliate WREG-TV/MEMPHIS.
Spun off to TEGNA were FOX affiliate WTIC-TV/HARTFORD and CW affiliate WCCT-TV/WATERBURY-HARTFORD; FOX affiliate WPMT-TV/YORK-HARRISBURG-LANCASTER, PA; ABC affiliate WQAD-TV/MOLINE (QUAD CITIES), IL; ABC affiliate WATN-TV and CW affiliate WLMT-TV/MEMPHIS; ABC affiliate WOI-DT and CW affiliate KCWI-TV/AMES-DES MOINES, IA; FOX affiliate WZDX-TV/HUNTSVILLE; from associated company DREAMCATCHER BROADCASTING, LLC, ABC affiliate WNEP-TV/SCRANTON and seven translators; and, to TEGNA's CAPE PUBLICATIONS, INC., CBS affiliate KFSM-TV/FORT SMITH, AR.
Divested to SCRIPPS were CW affiliate KASW-TV/PHOENIX plus one translator; CW affiliate WPIX (TV)/NEW YORK; CW affiliate WSFL-TV/MIAMI; FOX affiliate KSTU-TV/SALT LAKE CITY-KKRP-LD/ST. GEORGE, UT and six translators; FOX affiliate WXMI-TV/GRAND RAPIDS plus two translators; CBS affiliate WTVR-TV/RICHMOND; and, from associated company DREAMCATCHER BROADCASTING, LLC, CBS affiliate WTKR-TV/NORFOLK and CW affiliate WGNT-TV/PORTSMOUTH-NORFOLK.
And divested to CCB LICENSE, LLC (DUJUAN MCCOY's CIRCLE CITY BROADCASTING) are CW affiliate WISH-TV and getTV affiliate WIIH-CD/INDIANAPOLIS and MY NETWORK TV affiliate WNDY-TV/MARION-INDIANAPOLIS.