The group has entered into an agreement to purchase one low power and seven full power TV stations owned by New Age Media for $90 million. The stations are located in three markets and reach .8% of the U.S. TV households.
Sinclair expects the transaction will close and fund late in Q4 of 2013 or Q1 of 2014. The company expects to fund the purchase price at closing through cash on hand or a delayed draw under its bank credit agreement.
The New Age stations covered by the transaction are:
Station Affil. Market DMA
WOLF FOX Wilkes-Barre-Scranton, PA 54
WQMY MY Wilkes-Barre-Scranton, PA 54
WSWB CW Wilkes-Barre-Scranton, PA 54
WTLH FOX Tallahassee, FL 106
WTLF CW Tallahassee, FL 106
WGFL CBS Gainesville, FL 163
WNBW NBC Gainesville, FL 163
WMYG-LP MY Gainesville, FL 163
To comply with FCC local television ownership rules, Sinclair expects to sell the license and certain related assets of WSWB in Wilkes-Barre-Scranton, PA, WTLH in Tallahassee, FL and WNBW in Gainesville, FL to Cunningham Broadcasting Corp. and WTLF in Tallahassee, FL to Deerfield Media. New Age does not own the license assets of WSWB, WNBW, and WTLH, and
for many years it has provided services to these stations pursuant to existing shared services and JSAs.
Sinclair will continue to provide sales and other non-programming support services to each of these stations, as well as to WTLH, pursuant to customary shared services and JSAs.
“We are excited to be adding the New Age stations to our portfolio, growing our presence in Pennsylvania and Florida, and further diversifying our affiliation mix,” said David Smith, President and CEO of Sinclair. “Through each acquisition we continue to capture operating efficiencies and scale, as well as increase our cash flow for ongoing opportunities.”
Including the New Age station acquisitions, all previously announced acquisitions, and pro forma for expected synergies, the Company’s 2011 and 2012 net broadcast revenues would have been $1.634 billion and $1.894 billion, respectively. The $90.0 million purchase price represents a 6.8x multiple
of the average 2011-2012 cash flow including $4.9 million of operating synergies, and a 5.98x multiple on average 2014-2015 cash flow. Free cash flow is expected to average approximately $7.0 to $10.0 million per year which equates to $0.08 per share on average 2012-2013 pro forma free cash flow and
$0.10 per share on average 2014-2015 pro forma free cash flow.
On a pro forma basis assuming consummation of the New Age stations and all previously announced acquisitions, Sinclair will O&O, program or provide sales services to 162 television stations in 77 markets.