Nexstar Media Group Inc. has entered into an agreement to purchase all outstanding shares of Tribune Media Company. This acquisition will be worth $46.50 per share in a cash transaction that is valued at $6.4 billion including the assumption of Tribune Media’s outstanding debt. The result of the transaction will be the creation of the largest network of local television stations in the country. Both Tribune Media and Nexstar Media are based in the US.
Following the conclusion of the deal and planned divestitures it is predicted that Nexstar Media will gain synergies of approximately $160 million in the first year. This transaction will join two US-based media companies with complementary national coverage and will reach approximately 39% of the US television household’s pro-forma for anticipated divestitures and reflecting the FCC’s UHF discount.
The transaction is subjected to approval by the FCC, and satisfaction of antitrust conditions. The transaction will also require consent from Tribune Media’s shareholders, as well as customary closing conditions. Nexstar Media is planning to divest certain television stations necessary to fulfill with regulatory ownership limits. It may also divest other non-core assets.
This transaction will enable Nexstar to benefit from increased operational and geographic diversity and scale as a result of Tribune Media’s miscellaneous portfolio of media assets. The joint entity will be the US’ leading providers of entertainment, sports, local news, lifestyle and network programming through its broadcast and digital media platforms. Pro-forma annual revenue will be approximately $4.6 billion and pro-forma adjusted EBITDA of approximately $1.7 billion.
Nexstar Media Group is a TV station operator with reach of 174 full-power television stations in 100 markets addressing nearly 38.9% of US television households. Nexstar’s portfolio includes key affiliates of MyNetworkTV, FOX, NBC, CBS, ABC, and The CW.
Tribune Media is a media company with a diverse portfolio of television and digital properties. The company is one of the largest television broadcasting companies, owning 42 local television stations across the United States reaching approximately 50 million households.
Nexstar fought for Tribune Media with the investment company Apollo Global Management and managed to make a better deal – buying back Tribune shares in cash at a price of $46.5 per share, with a 15.5% compared to the closing price on November 30, 2018. The new company will bypass the current leader in the local TV station market, the Sinclair Broadcast Group Corporation, which, by the way, tried to acquire Tribune last year and even agreed to buy for $3.9 billion, but could not do it because of the position of regulators.
Nexstar Media’s Chairman, President, and CEO, Perry Sook said that Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies. The transaction offers synergies related to the enhanced scale of the combined broadcast and digital media operations and increases its audience reach by approximately 50%. Furthermore, the addition of the Tribune Media broadcast assets further expands Nexstar’s geographic diversity, as pro forma for the completion of the transaction. The company we will serve 18 of the nation’s top 25 markets and 37 of the top 50 markets.
Experts say that consolidation in the market of broadcasters is becoming the main strategy for protecting television companies from pressure from Netflix and other streaming services. The Nexstar and Tribune deal is the second major acquisition on the market this year.
Moelis & Company and Guggenheim Securities are acting as financial advisor to Tribune Media in connection with the proposed transaction. Kirkland & Ellis LLP and Wiley Rein LLP are acting as legal advisor, while BofA Merrill Lynch is acting as financial advisor to Nexstar Media. Covington & Burling LLP and Debevoise & Plimpton LLP are acting as legal advisor to Tribune Media.