Private equity group Cerberus Capital Management is putting its television group under the management of Perry Sook and his team at Nexstar Broadcasting Group. Nexstar will be paid a fee for running Four Points Media Group, which owns seven stations in four markets, and share in the profits if the stations are sold. Four Points bought the stations from CBS for $185 million in a deal that closed in January 2008.
Under the terms of the agreement, Nexstar will receive a fixed annual management fee of $2 million per year, as well as annual incentive compensation based on increases of the broadcast cash flow of Four Points’ stations. Nexstar will also be entitled to a share of the equity profits if the stations are sold while the agreement is in effect. The agreement provides for minimum compensation to Nexstar of $10 million if the Four Points stations are sold during the initial three year term of the agreement.
“The management contract is a rewarding endorsement of Nexstar’s proven operating disciplines and industry leadership and we are confident that the incentive compensation to be derived from this agreement will be significantly additive to the annual management fees based on our strategies to improve the market position and operating efficiencies of these stations,” said Sook.
“Managing the Four Points stations is an excellent complement to our existing station and e-Media operations as the four markets in which Four Points operates do not geographically overlap with stations and network affiliations in which Nexstar owns, operates, programs or provides sales and other services to,” he noted.
Under the terms of the management agreement, Nexstar will oversee Four Points’ station operations and act as a resource on sales, promotion, programming alternatives, production, operations (including e-Media functions), finance, contract administration and human resources. The agreement is effective March 20, 2009 and extends through March 31, 2012, with one-year renewal options.
Four Points owns KUTV-TV (CBS) & KUSG-TV (RTN) Salt Lake City; WTVX-TV (CW), WTCN-CA (MNT) & WWHB-CA (Azteca America) West Palm Beach; KEYE-TV (CBS) Austin, TX; and WLWC-TV (CW) Providence, RI.
RBR/TVBR observation: No doubt the television business hasn’t been what the folks at Cerberus expected when they bought this four market group, but they have much bigger problems to deal with. Their biggest investments are Chrysler and a big chunk of GMAC. Maybe Perry Sook will get a chance to tell them how they can sell more cars by doing more TV advertising.