Report from B&C…
Gannett has agreed to acquire Belo, boosting its broadcast portfolio from 23 to 43 stations. Gannett will acquire all outstanding shares of Belo for $13.75 per share in cash, or approximately $1.5 billion, plus the assumption of $715 million in existing debt for an enterprise value of approximately $2.2 billion.
The deal, subject to regulatory approval, is expected to close by the end of 2013.
The acquisition nearly doubles Gannett’s broadcast portfolio from 23 to 43 stations, including stations to be serviced by Gannett through shared services or similar arrangements. Upon completion of the transaction, Gannett said it will become the No. 1 CBS affiliate group, No. 4 ABC affiliate group, and will expand its already largest NBC affiliate group position.
“We are thrilled to bring together two highly respected media companies with rich histories of award-winning journalism, operational excellence and strong brand leadership,” said Gracia Martore, president and CEO of Gannett. “It will significantly improve our cash flow and financial strength, enabling us to quickly pay down debt while remaining committed to disciplined capital allocation. By enhancing our portfolio with one of the largest, most geographically diverse and network-balanced TV station groups in the country, the new Gannett will be well positioned to lead innovation, bolster our existing growth initiatives and take advantage of new opportunities in the emerging digital media landscape.”
The transaction, unanimously approved by the boards of directors of both companies, represents a 28.1% premium to the closing price of Belo common stock on June 12.
Gannett anticipates that the transaction will generate approximately $175 million in annual synergies within three years after closing.
In Belo, Gannett gets a group of stations with sterling reputations for local news and community involvement.
Dunia A. Shive, Belo’s president and CEO, called it “an outstanding and financially compelling transaction” for Belo’s shareholders. “I am confident that we have found an excellent partner in Gannett–they are a leading media company that shares our commitment to the highest levels of journalistic integrity and embraces an active approach to community involvement,” she added. “Together, this portfolio of media assets will be well-positioned to capitalize on substantial growth opportunities in the years ahead.”
The planned acquisition comes on the heels of a pending merger between Media General and Young Broadcasting, and several other examples of extreme consolidation in the local broadcasting business.
The announced deal did not sit well with Free Press, a veteran critic of media consolidation, which has pushed the FCC to tighten its ownership rules.
“We’ve seen time and again that media consolidation means fewer journalists and less diversity on the public airwaves,” Free Press president Craig Aaron told B&C. “Broadcasters are on a shopping spree, using cash from last year’s political ad bonanza to buy each other. The day is fast approaching when a small handful of companies will control all of the affiliates in major markets and the swing states.”