News Analysis: Regarding the Sinclair purchase of the Four Points TV stations, while there is nothing unusual about the purchase agreement, the price ($200 million) was close to what Cerberus (Four Points) paid for it back in 2008 (from CBS for $185 million). It is commonly known in the industry that the effective cash flow multiple on that deal was a bit above 10X.
Sinclair claims that they purchased Four Points for something in the order of 6.5X-7X cash flow. If the purchase price remains the same on the purchase and sale agreement between 2008 and today, but the multiple has gone down (Nexstar has been running that group under a management contract/LMA), it strongly suggests that Nexstar CEO Perry Sook and Nexstar were responsible for substantially raising cash flow. Because if the multiple went down by 35% from 10X to 6.5X and meanwhile the price was close to the same, it means the cash flow had to go up significantly, right?
Nexstar assumed station operations for the group–which includes full power stations in Providence RI and Austin TX (one is CBS), two full power stations in Salt Lake City UT (one is CBS) and one full power and two Class A stations in West Palm Beach FL–back in the spring of 2009.
We assume the improvement was due to trimming the fat (if any) in the CBS stations of the group and/or is it from the newly-found retransmission revenues, of which Sook was a trailblazer.
Sook tells RBR-TVBR it was all of the above (listen to the audio, above, for the full comment): “We brought our retransmission contracts to the table; we brought our vendor relationships and their cost structure to the table; we were active managers of these TV stations…”
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