Internet Broadcasting Systems is a digital publishing platform and digital agency services provider. The planned acquisition broadens Nexstar’s digital media portfolio with technologies that are complementary to the company’s and IB’s clients’ existing digital businesses and multi-screen strategies. IB will operate as a separate division in Nexstar’s digital media portfolio.
Nexstar is buying IB for $20 million in a transaction that’s expected to be accretive to 2014 results. The acquisition will be funded through internal sources and is expected to close later this month.
IB helps publishers engage and interact with their audiences through its suite of scalable digital solutions including websites, an SaaS-based digital publishing platform, original and syndicated content, and one of the largest digital ad agencies that provides full life-cycle advertising and sales operations solutions.
IB’s clients include Hearst Television and Post-Newsweek Stations, both of which have recently renewed their agreements with IB.
Said Tom O’Brien, Nexstar Broadcasting Group EVP/Digital Media and Chief Revenue Officer: “IB’s leading digital publishing platform adds new IP and digital workflows to our digital platform offerings, allowing us to marry best-of-breed digital media practices from our current operations with those of IB to deliver more fully-integrated digital management solutions to IB’s clients and our markets to generate new revenue across multiple digital platforms. The IB acquisition also marks Nexstar’s entry into the profitable and fast-growing digital agency business. IB currently has a strong client roster and expertise in this business, and with Nexstar currently owning and operating more than 50 web properties, we will be in an ideal position to offer enhanced digital services to our customers as well as more innovative multi-platform marketing solutions for local and national advertisers on-air, online and on mobile devices.”
The purchase price represents a mid-5x multiple of pro-forma 2014 EBITDA. In the first year following the closing of the transaction, IB’s operations are expected to expand Nexstar’s digital business portfolio to over $45 million in annual revenues.
Added Perry Sook, Nexstar CEO: “By adhering to our disciplined criteria, we are acquiring a profitable digital business at an attractive pro-forma EBITDA multiple. The purchase multiple is consistent with that of Nexstar’s recent station acquisitions and is below that of other recently announced industry transactions. Consistent with our long-term strategic objective to identify and execute accretive transactions that build our revenue, scale and operating base, Nexstar intends to continue to focus on digital investments that allow us to further expand the company’s overall digital media business portfolio, capitalize on emerging market trends to maximize multi-platform audiences and revenue opportunities.”
RBR-TVBR observation: A great diversification, vertical integration and hedge play for a television broadcaster. IB also serves the multiplatform digital needs of newspaper and radio properties, so this goes beyond serving TV stations’ digital/website operational and content needs. IB provides plug-and-play set of tools for mobile, video and content sharing, including an interactive, API-driven (Application Programming Interface) content exchange and a video content management system.
