In November 2017, a company that had established itself as a multicast TV network specialist forged closer ties with one of the nation’s biggest owners of broadcast television stations. A partnership would see the debut of an action and exploration network, to be paired with an already launched mystery and investigations-centered offering.
Now, the specialist is selling its stake in the networks to its partner of 2 1/2 years.
TEGNA has agreed to acquire Cooper Media‘s 85% stake in multicast networks Justice Network and Quest.
TEGNA had a 15% stake in both networks, valued at $14 million.
Now, TEGNA will pay approximately $77 million in cash for the remaining stake in Justice Network and Quest that it does not currently own.
There will be no leadership changes at the Atlanta-based networks with the transaction, with President/GM Brian Weiss joining TEGNA and staying on as Justice Network and Quest head.
TEGNA said in a Monday morning announcement that the transaction is expected to be accretive to EPS within the first 12 months and immediately accretive to free cash flow.
At 11am, TEGNA shares were at $15.75, up 36 cents from Friday’s close, and rising.
Justice Network and Quest reach more than 87 million U.S. television homes, thanks to over-the-air placement in such markets as Miami (Justice is on the DT2 channel of Univision flagship WLTV-23 while Quest is on a DT channel for UniMás WAMI-69).
Justice Network and Quest each offer “unique ad-supported programming,” with Justice launched in 2015 and Quest coming last year through the Cooper Networks-TEGNA partnership.
For TEGNA, grabbing a greater stake in the potentially big digital multicast realm is part of its long-term growth strategy.
“Consumer viewing habits are shifting toward over-the-air consumption supplemented by inexpensive over-the-top services,” said TEGNA President/CEO Dave Lougee. “Justice and Quest allow us to fully capitalize on the growth in over-the-air television audiences, which has increased by more than 48 percent over the past eight years.”
For Cooper Holdings chairman and founder Lonnie Cooper, who built both digital nets from the ground up, “The timing is right for Cooper Holdings to focus on its core agency businesses, while cheering on the networks’ continued success as part of the TEGNA family.”
Housed under Cooper Holdings are YAH, an experiential agency; CSE, a sports and broadcast talent representation agency; and digital shop IfThen.
TEGNA plans to finance the transaction through the use of available cash and borrowing under its existing credit facility, and the company says will not have a material impact on TEGNA’s leverage.
The transaction is subject to Hart-Scott-Rodino clearance and customary closing conditions and is expected to close by the end of the second quarter of 2019.
Nixon Peabody LLP is acting as legal counsel to TEGNA in connection with the proposed transaction.