E.W. Scripps’ Deal For ION Media: Payoff For Warren Buffett?

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E.W. Scripps’ Deal For ION Media: Payoff For Warren Buffett?
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Earlier today, E.W. Scripps announced it has agreed to purchase ION Media for $2.65B.

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Below is some commentary on this transaction from Justin Nielson. Justin Nielson is a senior analyst at Kagan, the media research unit of S&P Global Market Intelligence and he focuses on the covering the broadcast and media sectors.

E.W. Scripps’ deal for ION Media

“First impressions on E.W. Scripps’ deal for ION Media is that it is a transformational acquisition combing the local station and network assets into a nationwide TV platform with a reach of over 100M homes. The $2.65B deal price  when applied to our two-year forward cash flow estimates for the ION network and 71 stations places it on the higher end of recent seller multiples at 9x-10x, but when including expected $120M in annual synergies implies a buyer’s multiple in the 5x-6x range.

Revenue growth and cash flow expectations are predicated on E.W. Scripps ability to build out the ION and digital multicast network advertising business in combination with Katz networks, Newsy and local stations. In addition, E.W. Scripps will need to tap into ATSC 3.0 opportunities for new channels, interactive advertising options and potential spectrum leasing. This large a deal is a big gamble given current market conditions, but could pay off big for E.W. Scripps and it’s investors including Warren Buffett’s Berkshire Hathaway.”

What do you think of the Berkshire deal? Let us know by sounding off in the comments section.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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