On March 30, word first surfaced that a most unlikely entity had signed a deal with Cox Media Group to acquire 18 television stations it needed to sell in order for a bigger deal — the privatization of TEGNA — to gain regulatory approval.
Paperwork was filed on April 11 with the FCC, along with newly released pricing details making the CMG spin a blockbuster of a deal. Now, that transaction has closed, making Imagicomm Communications — to the dislike of at least one Member of Congress — the new owner of a collection of broadcast TV facilities.
The sale of the 18 stations to Imagicomm came at a cost of $488 million — plus the working capital amount, minus any deficit if applicable.
This makes Imagicomm’s offer for the Cox spinoffs among the largest divestments seen in recent memory — even bigger than a deal consummated between Gray Television and Allen Media Group.
With Quincy Media, Inc.’s sale to Gray Television, valued at $950 million, the Byron Allen-led entity stepped forward and purchased 10 stations at a price of $380 million. A separate deal, valued at $70 million, also gave AMG ownership of WJRT-12 in Flint, Mich.
While the combined $450 million Allen invested in the 11 stations represents a higher per-station value than the Imagicomm transaction, the total dollar amount is what is eye-popping to David Schutz, of Hoffman Schutz Media Capital in Bainbridge Island, Wash. The last divestment of this size came in 2011, when Bonneville International Corp. agreed to spin certain stations to Hubbard Radio. The properties included WTOP Radio, today the nation’s No. 1-billing radio property.
The sale of the 18 stations to Imagicomm was engineered so TEGNA could gain regulatory approval of a shareholder approved plan that sees Standard General acquire of a majority stake in the company, and CMG majority shareholder Apollo Global Management take a non-voting minority equity stake in what will be a new TEGNA.
As part of the deal terms, Imagicomm must honor the collective bargaining deal in force at the Binghamton, N.Y. stations with NABET-CWA and AFL-CIO.
The stations now owned by Imagicomm are:
- Alexandria, La. – KLAX-31 (ABC)
- Binghamton, N.Y. – WICZ-40 (FOX)
- Eureka-Arcata, Calif. – KIEM-3 (NBC) & KVIQ-17 (CBS)
- Greenwood, Miss. – WABG (ABC), WABG-HD2 (FOX), WNBD (NBC), and WXVT (CBS),
- Idaho Falls, Idaho – KPVI-6 (NBC)
- Medford, Ore. –KMVU-26 (FOX)/KFBI-48 (Telemundo)
- Memphis – WHBQ-13 (FOX)
- Spokane – KAYU-28 (FOX)
- Syracuse – WSYT-68 (FOX)
- Tulsa – KOKI-23 (FOX) and KMYT-41 (MyNetwork TV)
- Yakima, WA – KFFX-11 (FOX) and simulcast partner KCYU-LD 41 in Tri-Cities, Wash.
- Yuma, AZ – KYMA-11 (NBC)
All but the Tulsa pair and the Memphis property are former Northwest Broadcasting properties, sold by the Brian Brady-led organization to Apollo Global Management right before it obtained majority control of CMG.
WHBQ has been a part of the CMG family since October 2014, when it formally gained control of the property through a trade with Fox Television Stations that gave the entity led by Jack Abernethy ownership of KTVU-2 and KICU-TV (branded as KTVU+) in San Francisco. That deal also yielded CMG WFXT-TV in Boston, a key component of Cox’s TV holdings.
The Tulsa siblings, KOKI and KMYT, entered the Cox Media Group family in July 2012 as part of a $300 million transaction with Newport Television that also gave CMG two television stations in Jacksonville.
A COUP FOR CERULLO
How did Imagicomm come to the forefront and win the 18 stations in a multimillion-dollar deal?
Imagicomm is led by David Cerullo. He’s an American Pentecostal minister and televangelist.
That did not sit well with Rep. Jared Huffman (R-Calif.), who verbally protested the transaction with Cox Media Group. Huffman cited further industry consolidation as a reason for his pledge to block the sale. Yet, Imagicomm is a brand-new broadcast TV licensee. Until now, it has been mainly known for its operation of INSP, a MVPD-distributed network that has its roots in the Jim Bakker Ministries’ PTL. Programming has long shifted from Christian-themed religious fare to Westerns and family-focused offerings.
Nevertheless, Huffman is likely concerned that giving Cerullo’s group ownership of the NBC and CBS affiliates, as Sinclair Broadcast Group controls the FOX and ABC affiliates, eliminates progressive political voices and could influence local newscasts. Huffman is based in Eureka, Calif.
In prepared comments, Cerullo said, “This acquisition is part of our broad corporate strategy to expand our media ownership across multiple entertainment platforms. We’re excited to bring these stations into the Imagicomm family because we know they are important local-journalism brands. We look forward to working with the talented staff at each station and building upon their rich legacy of serving their communities, advertisers, and audiences.”
For CMG, the transaction is the right next step for its TV business, it said. “This transaction advances the evolution of our asset portfolio as we connect and inspire diverse audiences every day through our unparalleled brands, award-winning content, and exceptional team members,” said CMG President/CEO Dan York. “While it’s hard to see these stations and talented professionals leave the CMG family, we’re confident they’ll continue to inform, entertain and elevate their communities on behalf of Imagicomm, just as they did for us.”
Truist Securities served as financial advisor to INSP and Imagicomm Communications in connection with the Transaction and is acting as left lead arranger on the debt financing. Davis Wright Tremaine LLP served as lead M&A counsel to INSP and Imagicomm Communications, and Bradley Arant Boult Cummings served as their financing counsel.
Moelis & Company LLC and LionTree served as financial advisors to Cox Media Group, and it was represented on the transaction by Davis Polk & Wardwell LLP, with Cooley LLP and Morgan Lewis & Bockius LLP serving as special regulatory counsel.
