As discussed in the company’s Q3 conference call (see related story), Sinclair has a purchase agreement to buy Irvine, CA-based Freedom Communications’ eight TV stations for $385 million. Before the deal closes in Q1 or Q2 of next year, an LMA is planned and will likely be attributable to Q4 ’11 numbers. Pro forma for the Freedom and currently LMA’s (to be purchased) Four Points television stations, after all is said and done, Sinclair will O&O, program or provide sales services to 73 television stations in 46 markets, reaching 26.3% of the U.S. television households. Sinclair’s television portfolio will consist of 20 FOX, 18 MNT, 13 CW, 11 ABC, 9 CBS, 1 NBC, and 1 Azteca station, in addition to 79 multicast channels.
Freedom’s eight stations, located in seven markets, reach 2.63% of the U.S. TV households. Freedom’s print portfolio includes some 100 daily and weekly publications, plus ancillary magazines and other specialty publications.
The eight stations to be acquired are:
WPEC (CBS 12) West Palm Beach, Florida (DMA 38)
WWMT (CBS 3) Grand Rapids/Kalamazoo/Battle Creek, Michigan (DMA 42)
WRGB (CBS 6) Albany, New York (DMA 58)
WCWN (CW 45) Albany, New York (DMA 58)
WTVC (ABC 9) Chattanooga, Tennessee (DMA 86)
WLAJ (ABC 3) Lansing, Michigan (DMA 115)
KTVL (CBS 10) Medford-Klamath falls, Oregon (DMA 140)
KFDM (CBS 6) Beaumont-Port Arthur-Orange, Texas (DMA 141)
Freedom also broadcasts a number of secondary channels, including the CW affiliates in Kalamazoo, Lansing, Medford and Beaumont, which will also be acquired as part of the deal.
The transaction is subject to Freedom’s shareholder approval which must be obtained by 11/8, approval by the Federal FCC and antitrust clearance. Following that, expected to occur within 30 days, and prior to closing of the deal, as mentioned above, Sinclair will operate the stations pursuant to a Local Marketing Agreement.
The companies anticipate closing and funding of to occur late in Q1 or early in the second quarter of 2012. SBGI expects to finance the $385 million purchase price, less a $38.5 million deposit payable upon Freedom’s shareholder approval, either through a bank loan or by accessing the capital markets.
“We are excited about bringing the Freedom stations into the Sinclair portfolio, particularly in light of our recent agreement to acquire seven television stations from Four Points Media,” says David Smith, Sinclair CEO. “Not only will this transaction, when coupled with the Four Points transaction, result in us owning two full power stations in compliance with FCC regulations in West Palm Beach, Freedom’s largest market, but it allows us to expand our middle market position and network diversification. We believe our expertise and presence will enable us to improve the stations’ competitive position and profitability. We look forward to welcoming the Freedom employees to the Sinclair family.”
Marci Ryvicker, Wells Fargo Securities analyst, was positive on the announcement: “Freedom has 8 TV stations – affiliated with CBS, ABC and CW. We believe EBITDA was $45M, so this represents an 8.5x multiple pre-synergy. We view this deal as POSITIVE for SBGI – good multiple (likely in the 6x’s post synergies) and a good way to diversify away from FOX. SBGI also continues to pay a dividend well above media peers.”