This builds on Nexstar’s effort to bulk up with help from its election year windfall from sales of political ads. In today’s deals, the company paid Newport Television $35.4M for a CBS affiliate in Fresno, an NBC/CW station in Bakersfield, and a low-powered Telemundo affiliate there. In addition, Nexstar agreed to pay Mission broadcasting $17.1M for the Fox and ABC affiliates in Burlington, Vt. The FCC has to bless the arrangements before they can take place; Nexstar expects them to close early next year. They follow the company’s deal in July to buy 12 stations in markets including Salt Lake city, Little Rock, and Memphis.
Here’s today’s release:
IRVING, Texas & FRESNO, Calif & BAKERSFIELD, Calif & BURLINGTON, Vt.– Nexstar Broadcasting Group, Inc. (Nasdaq: NXST) announced today that it has entered into a definitive agreement to acquire the assets of KGPE-TV, the CBS affiliate serving the Fresno, California market and KGET and KKEY-LP, the NBC/CW affiliate and low powered Telemundo affiliated stations serving the Bakersfield, California market from entities controlled by privately-held Newport Television, LLC (“Newport”) for $35.4 million in a transaction that is expected to be immediately accretive to Nexstar.
Separately, Nexstar announced that it and Mission Broadcasting entered into a definitive agreement with Smith Media, LLC and affiliates (“Smith”) to acquire the assets of WFFF-TV, the FOX affiliate and WVNY the ABC affiliate serving the Burlington, Vermont market from for a total of $17.1 million plus any working capital adjustments applicable at the time of closing in a transaction that is also expected to be immediately accretive to the Company. Nexstar and Mission will enter into a local services agreement to provide sales and other services to WVNY upon consummation of the transaction.
The proposed transactions are expected to be accretive to Nexstar’s operating results immediately upon closing and will result in Nexstar operating one station and providing sales and other services to another in 25 of the 41 markets where it operates (which assumes the completion of the acquisition of twelve Newport stations, announced in July 2012). In addition, it will expand to 71 the number of stations and related digital signals that Nexstar either owns or provides sales and other services to.
Nexstar and Mission intend to finance the station acquisitions, through borrowings under their senior credit facilities. The transactions are subject to FCC approval and other customary approvals, and the Newport and Smith station acquisitions are expected to close in the first quarter of 2013.
Commenting on the agreements, Nexstar Broadcasting Group President and Chief Executive Officer, Perry A. Sook said, “These transactions are consistent with our criteria for acquisitions that further strategically diversify our operations, create or present opportunities for virtual duopoly markets and which are financially accretive.
“In aggregate, the purchase price for the five new stations is less than 5.0 times the average 2011/2012 pro-forma cash flow and we expect the combined acquisitions to increase our free cash flow by approximately 8% to 10% annually in each of the next two years. Under Nexstar and Mission’s ownership the stations will realize additional retransmission revenues as well as synergistic operating improvements, and on a pro-forma basis the acquisitions are both immediately accretive to results and leverage neutral on a debt-to-cash-flow basis.”
According to Nielsen Media’s 2012-2013 Local Market Estimates, the Fresno, California, Bakersfield, California and Burlington, Vermont DMAs are ranked as the 55th, 126th and 97th largest television markets in the country, respectively.
Waller Capital Partners served as the exclusive financial advisor to Smith Media, LLC.