Tegna (a near-anagram of “Gannett”) was originally part of Gannett before the company’s newspaper and TV assets were divided in 2015. The TV company is one of the top local station owners in the U.S. The station sector has been in flux after Sinclair Broadcast Group tried and failed to acquire Tribune Media in 2018, and Nexstar Media Group then swooped in to make a $4.1 billion offer for Tribune. The Nexstar-Tribune deal is expected to close in the next several weeks.
The Republican-led Federal Communications Commission since 2017 has indicated willingness to loosen restrictions on station ownership from the current cap of 39% of U.S. households. Sinclair-Tribune would have blown past that traditional cap level, but the merger ran aground based on other red flags surrounding divestitures of stations.
Tegna stock closed at $14.77 on above-average trading volume. In the closing minutes of last Friday’s trading day, it shot up more than 10% on rumblings of Apollo’s interest. The Wall Street Journal also reported on the talks.
In a brief statement Wednesday aimed at clarifying the situation, Tegna said it “received a letter from Apollo in late February 2019, stating that Apollo was interested in acquiring Tegna without specifying a price. Subsequently, in June 2019, Apollo made a different proposal, to combine Tegna with broadcasting assets Apollo is in the process of buying, in a transaction that would not have constituted a change of control of Tegna.” The statement concluded by noting that the company does not plan to offer an update on the disclosure.
Marci Ryvicker, an analyst with Wolf Research and a specialist in local broadcasting, wrote in a note to investors that the moves by Tegna indicate it will be operating under the shadow of M&A speculation. Also, she noted, the bigger picture has darkened of late. “Wall Street has fallen out of love with broadcast (today) due to concerns re: retrans, core advertising & recession.,” she wrote.