Line forms for the auction block: LIN also for sale

LIN Television's stock was up 3.7% on Thursday as speculators bet that it would soon follow Nexstar in putting itself up for sale. Sure enough, at mid-day Friday LIN announced that its board had retained J.P. Morgan Securities to help it explore "strategic alternatives" - the Wall Street euphemism for hanging out a "for sale" sign. That sent the stock price soaring an additional 13%. The move is not a big surprise.

LIN's biggest shareholder is HM Capital Partners, formerly knows as Hicks, Muse, Tate & Furst, which had previously cashed out its large stake in Clear Channel Communications. Bear Stearns analyst Victor Miller told clients in a note that HM owns approximately 44% of the economics of LIN and that the TV group appears to be the last investment of HM's funds 3 and 4, which are likely going to be liquidated in 2008.

He estimates that the HM basis for its LIN investment is approximately 21 bucks per share. Miller sees a takeout value of 23.75-28.25 per share, based on 12.5-14 times blended 2007-2008 EBITDA.

TVBR observation: As with Nexstar, we see private equity players as the most likely buyer for LIN. For two billion plus, including debt, the buyer will get a top-performing local TV platform with most of its 29 stations in markets 25-71 - only four are in markets 100+. Thrown in for good measure is a 20% stake in a joint venture with NBC Universal which owns and operates the NBC stations in Dallas and San Diego.

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