Gray to buy KEVN-TV, KIVV-TV


Gray TelevisionGray Television is getting KEVN-TV in Rapid City, South Dakota, from Mission TV, LLC for $7.75 million in cash.  KEVN-TV serves as the Fox affiliate for the Rapid City market. KEVN-TV’s network programming, strong local newscasts, and leading syndicated programming make it the number-two ranked television station in its market, according to BIA Kelsey revenue data.  The transaction includes KEVN-TV’s satellite station in Lead, South Dakota, KIVV-TV. Mission TV, LLC is not affiliated with Mission Broadcasting, Inc.

Said William Reyner, President of Mission TV: “Over the past 15 years, our dedicated staff has excelled in building and growing a Station committed to providing the finest service possible to the Black Hills.  While the decision to sell is a difficult one, I am confident that Gray Television’s resources, fine leadership and supportive management team will provide KEVN and its fine employees with tremendous opportunities to build upon their successes and better serve our loyal viewers.”

“We are excited to add to the Gray family another leading news station in the Upper Midwest, as well as our first stand-alone full-power Fox affiliate,” said Kevin Latek, Gray’s SVP/Business Affairs.  “We expect KEVN-TV will integrate well with our recently announced proposed acquisition of the ABC affiliate in Sioux Falls, South Dakota, and the NBC affiliates in the Fargo and the Minot-Bismarck, North Dakota, markets from Hoak Media,” he added.

The purchase price represents a multiple 5X a blended average of 2012-2013 pro forma broadcast cash flow of the stations including expected synergies.  As such, Gray’s acquisition of KEVN-TV and KIVV-TV will be immediately free cash flow accretive to Gray.  The transaction is expected to close in the first or second quarter of 2014.

Noted Marci Ryvicker, Wells Fargo Securities Senior Analyst: “This transaction represents a 5.0x buyer’s multiple on a blended 2013E/2014E pro-forma BCF including synergies. For reference, GTN currently trades at ~10.8x blended EBITDA. GTN is using existing cash on hand to buy: i) KEVN-TV in Rapid City, South Dakota (DMA 173), which is affiliated with FOX; and ii) KEVN-TV’s affiliated satellite station, KIVV-TV, also in Rapid City, South Dakota. We believe synergies are coming both from retrans as well as cost savings between GTN’s ABC (Sioux Falls, South Dakota) and NBC (Fargo-Valley City, North Dakota & Minot-Bismarck-Dickinson, North Dakota) affiliates from the previously announced Hoak acquisition. Pro-forma for all announced acquisitions, GTN will own 72 ”Big-4” affiliated channels in 40 markets, reaching 7.3% of US TV households.”