In a major move that brings the company formerly known as Gannett into “America’s Finest City,” TEGNA has struck a deal with Midwest Television that will allow it to acquire CBS affiliate KFMB-8 in San Diego — and News/Talk KFMB-AM 760 and Adult Hits KFMB-FM 100.7 — for $325 million.
The deal also includes KFMB-8.2, which recently became the market’s affiliate for The CW.
San Diego is DMA No. 29 for television, and No. 17 for radio.
“This is a marriage of two great broadcasting cultures,” said Dave Lougee, TEGNA’s President/CEO. “We have long admired our dedicated colleagues in San Diego and look forward to continuing the stations’ high-quality journalism, editorial independence and commitment to their local community. We have a proven ability to be a strategic and disciplined consolidator with a track record of acquiring profitable businesses at an attractive, accretive valuation. Looking ahead, we will continue to evaluate additional investments and select transactions to build on our growth and success with a focus on creating shareholder value.”
Elisabeth Kimmel, Midwest Television’s President and owner, added, “This transaction is a testament to the outstanding value our employees have created serving the San Diego community. Having owned these properties for over 55 years, our family believed it imperative to find an excellent steward for television and radio stations that the community has embraced as part of the fabric of San Diego. We have found such a partner in TEGNA, an innovative media company that shares our commitment to the highest levels of journalistic integrity and serving the greater good of the community. We welcome TEGNA to San Diego with the knowledge that their values, resources and community leadership will serve our employees, consumers and customers for decades to come.”
TEGNA notes that the transaction, structured as an asset purchase, represents an attractive purchase price multiple of 6.6 times average expected 2017/2018 EBITDA, including expected run rate synergies and tax benefits.
TEGNA expects the transaction to be accretive to EPS by a few cents within the first 12 months after close, and immediately accretive to free cash flow.
TEGNA plans to finance the transaction through the use of available cash and borrowing under its existing credit facility. It adds that it expects to close on the acquisition in the first quarter of 2018.
WHAT’S NEXT FOR RADIO COMBO?
The biggest question likely to come from the radio broadcasting industry is whether TEGNA will retain KFMB-AM & FM, or spin the stations to a third party — perhaps one with room to grow in a market the size of San Diego.
KFMB-FM is tied for 6th, 6+, in the November 2017 Nielsen Audio ratings for San Diego. It is fueled largely by the Dave Shelley & Chainsaw morning show, previously at iHeartMedia’s KGB-FM 101.5 and, prior to that, at other stations in the market. Other market veterans at KFMB-FM include Robin Roth and Mikey Esparza, host of The Mikey Show.
Meanwhile, KFMB-AM is far behind its FM sibling, with a 1.9 share, 6+, in November. Its program schedule includes the syndicated Armstrong & Getty morning show, and programs from Mark Larson, Mike Slater, Brett Winterble, and Mark Levin.
With KFMB-AM & FM, TEGNA will have its only radio properties. TEGNA was renamed after Gannett decided in June 2015 to spin its newspapers into a separate company.
But, Gannett was no stranger to radio: From 1979-1997 it owned legendary Top 40 KIIS-FM 102.7 in Los Angeles. In San Diego, during that same time period, Gannett owned KSDO-AM 1130 and what is now KLQV-FM 102.9.
TEGNA could very well keep the radio stations, taking a page from another TV operator that had shed all of its radio stations years ago: Sinclair Broadcast Group.
In Seattle, the company best known today for its TV stations and desire to merge with Tribune Media owns four radio stations: News KOMO-AM & FM, Talk KVI-AM 570 and Hot AC KPLZ-FM 101.5. The stations came as part of Sinclair’s acquisition of Fisher Broadcasting; KOMO-FM came into the fold in June 2017, as Sinclair exercised its option to acquire the station.
The stations were retained as they proved to be a good sales and audience fit for KOMO-4, the ABC affiliate in Seattle.
Additionally, privately owned Hearst retains ownership of WBAL-AM 1090 and WIYY-FM 97.9 “98 Rock” in Baltimore — a News/Talk and Active Rock combo.
KFMB-AM & FM could be viewed in the same manner by TEGNA.
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