Wells Fargo analyst Marci Ryvicker felt the need to hit the caplock key when describing the accretive properties of Nexstar’s $270M acquisition of Communications Corporation of America. She said it is VERY accretive.
She said it looks like the deal will bring with it $100M in revenue and $50M in broadcast cash flow going into 2014. It is expected to close during the fourth quarter of 2013.
Seven duopolies figure into the deal. CCA has five that are coming in the deal already intact. Two others are formed with properties already in the Nexstar portfolio in the DMAs of Evansville IN and Odessa-Midland TX
Another nice feature, noted Ryvicker, is the fact that the CCA stations tend to cluster around two of Nexstar’s operation hubs, those being Little Rock AR and Lubbock TX.
It’s expected that Nexstar will end the year with slightly higher than was previously predicted – 3.5x rather than somewhere in the low 3’s.
Nexstar is rated to outperform.
RBR-TVBR observation: It will be very interesting to see that the FCC does in its quadrennial review. We’re seeing a wave of consolidation on the television side of the broadcast fence that mirrors the one that radio rode after Telecom 1996. The difference is that radio companies had room to buy stations. Television companies are often forced to create de facto consolidated operations through the use of JSAs and SSAs.
The FCC has made noise from time to time that it is taking a look at whether or not to make such arrangements attributable. If it does, a lot of such arrangements could well be in jeopardy.
We have to think that the FCC will consider how much disruption it would cause in the business – after all, it has sat back and allowed the many de facto duopolies now in operation to be formed. It would be extremely chaotic to suddenly say that most of them are impermissible.
The FCC’s decision on television ownership will be a key part of the proceeding, when it is finally exposed to the light of day.
