Nexstar Broadcasting Group, Inc. (NASDAQ:NXST), and one of its affiliates will acquire 12 television stations from closely-held Newport Television LLC, in a $285.5 million deal that will substantially increase Nexstar’s geographical footprint.
Nexstar will acquire the following 10 stations across seven markets: KTVX and KUCW in Salt Lake City, WPTY and WLMT in Memphis, WYSR in Syracuse, WBGH and WIVT in Binghamton, NY, WETM in Elmira, NY, WJKT in Jackson, TN and WWTI in Watertown, NY.
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Mission Broadcasting, the affiliate, will acquire KLRT and KASN in Little Rock.
“The Newport transaction is a transformational event for Nexstar from a strategic and operational standpoint, and will bring very significant free cash flow accretion to the company immediately upon closing,” said Perry Sook, Nexstar chairman, president and CEO. “The acquisition significantly expands our revenue and operating base with stations, where we can quickly apply our operating and management disciplines to meaningfully improve their performance, which we believe will drive strong cash flow growth.”
Sandy DiPasquale, president-CEO of Newport, said, “These divestitures are the result of a thoughtful strategic review process conducted by the board to maximize value at Newport, and we believe these high quality stations will have a bright future with their new owners. Nexstar, Sinclair, and Cox are well-suited to foster continued success at each of these stations. We, and our partners at Providence, appreciate the hard work and dedication of all the employees at our television stations. We are in discussions with potential buyers of our remaining stations, and are confident we will find the right new owner for each of them.”
Al Dobron, a Managing Director at Providence Equity, which owns a majority stake in Newport, commented, “We thank Sandy and everyone at Newport for their outstanding contributions to the company’s strong performance over the last four years. We are pleased with the value that we have added together, and expect these stations to continue their success in the years ahead.”
In the first year after closing, the acquisition would add $110 million in revenue. In 2014, the second year of combined operations, aggregate net revenues would be $550 million, and would add $55 million to EBITDA after a synergy savings of $19 million.
According to Sook, the purchase price for the Newport stations is approximately 5.5 times the stations’ average 2011/2012 pro-forma projected cash flow, and approximately 5 times their 2012 pro-forma projected cash flow.
Operationally, the transaction would result in a significant expansion of Nexstar’s broadcasting platform – resulting in the firm owning, operating, or providing sales and services to 67 stations in 40 markets, or about 11 percent of total U.S. television households.