Wells Fargo upgrades the new LIN Media


LIN MediaLIN has basically merged with itself, combining LIN Television into LIN Media and morphing from a corporation to a limited liability company. With a joint venture with NBC now in the rear view mirror and a smaller related tax hit than anticipated, the company’s prospects are said to be looking up.

Marci Ryvicker of Wells Fargo is now rating LIN Media in the outperform category, partly due to the loss of what she terms the NBC JV “overhang” and also in recognition of the company’s earning potential based on its core advertising, retransmission consent income, it digital platform and its strong management.

The merger will provide a savings of $115M, and the end-of-JV tax hit, now set at $48M, will be settled before year’s end. The tax bill is another positive, by the way – Ryvicker noted is recently as a few weeks ago it looked like the hit was going to be in the $80M range.

The company’s free cash flow prospects were labeled “compelling,” and the company was further described as primed to get back into the merger and acquisitions game. In particular, the end of the NBC JV has opened doors in this area.

Ryvicker concluded, “We like digital and net retrans. While core advertising might be a bit soft for now, we see potential for significant upside in net retrans and digital. We anticipate hearing more about these catalysts as management engages once again with investors.”