Sony Pictures and Apollo Global Management have made a $26 billion cash offer for Paramount Global, according to published reports.

Shari Redstone, whose family investment company National Amusements owns a controlling voting interest in Paramount, has been pursuing a deal with Skydance Media, which would pay a premium for National Amusements.

The Skydance deal raised opposition among Paramount’s other shareholders and led to the departure of Paramount CEO Bob Bakish.

Paramount stock, which has bounced up and down amid reports of bids for the company, jumped 12% Thursday on news of the new bid from Apollo and Sony.

A Paramount spokesman said the company wasn't commenting.

Paramount Global stock rose 8% in afternoon trading on reports that Apollo Global Management had offered $11 billion to buy the media company's TV and film studios.

Paramount has been the subject of takeover speculation for weeks. Media entrepreneur Byron Allen said he offered $30 billion for all of Paramount in January and Skydance Media reportedly proposed a merger.

Controlled by Shari Redstone, the daughter of founder Sumner Redstone, Paramount is considered to be too small to compete in the streaming wars while its linear broadcast and TV operations are losing viewers and revenue.

It is not clear how eager Redstone is to sell the business at its current valuation.

Apollo is already in the TV business, having purchased Cox Media Group stations from Cox Enterprises in 2019.

Paramount reported higher fourth-quarter earnings in February, with net income of $514 million. Revenue fell to $7.6 billion.

The company’s Paramount Plus added 4.1 million subscribers in the fourth quarter, reaching 67.5 million, and Paramount cut its losses from streaming to $490 million.

The NewsGuild-CWA and National Alliance of Broadcast Engineers and Technicians-CWA unions are using a retransmission consent impasse between Dish and Apollo Global Management’s Cox Media Group to argue against the Standard General-Tegna merger at the FCC.

The unions have petitioned to block the deal, and cited a B+C story about the retrans flap for tipping them to satellite TV provider Dish Network’s allegation that Cox Media Group delayed doing a retransmission-consent deal because it wanted to bundle in Standard General and Tegna stations “connected” to Apollo.

The Federal Communications Commission is currently vetting Standard General’s proposed purchase of Tegna stations. Standard General has agreed to acquire Tegna in a deal partially financed by Apollo. If the transaction is approved, CMG would wind up with some of the stations involved as part of the deal.

Cox Media Group said claims made by Dish were false, and that it “never sought to negotiate for stations it did not own.” CMG also said it had sent a “cease and desist” letter to Dish “demanding” that it retract the claim.

Also: Standard General Stations Blacked Out in Dish Dispute

In a letter to the FCC filed late Friday (December 9), the unions told the regulator that Cox’s denial notwithstanding, which they said was insufficiently explicit, there was room within that statement to engage in coordinated pricing.

And even if there was no foot-dragging related to unowned stations or an “unambiguous violation” of FCC regulations, the “incident” demonstrated that “the dubious structure of the proposed transactions [Standard General buying Tegna stations with some spinoffs] is inherently contrary to commission policies.”

The unions reiterated that the structure is sufficiently ”dubious“ such that there is no structural remedy the FCC could impose to make it pass public-interest muster.

The unions filed their petition to dismiss or deny the deal with the FCC back in June  ▪️

Standard General, Apollo General and Tegna have pledged to the Federal Communications Commission that they will not jointly negotiate or share information on retransmission consent after their proposed merger-station swap, but that’s not enough for ACA Connects and the other members of the American Television Alliance (ATVA). They want conditions on the deal and an enforcement mechanism.

Standard General agreed to acquire Tegna in an $8.6 billion deal that includes the assumption of $3.2 billion in debt. Apollo Global Management (AGM) is providing some of the funding for the deal. AGM controls Cox Media Group (CMG), which will own some of the Tegna stations if the deal is approved.

In comments on that proposed deal, which is still being vetted by the FCC, ATVA said the parties are just trying to prevent conditions with a statement that has two big loopholes: “1) none of it applies to affiliates of the named parties, and 2) the part about joint negotiation does not apply to Cox.”

Also: Groups Say Tegna Deal Will Jack Up Cable Prices

The group also points out that the Justice Department has found, in another context, that CMG  and Tegna have “already” (emphasis ATVA's) unlawfully shared information. In 2019, the DOJ settled with CMG, Tegna and other broadcast groups over issues of sharing competitively sensitive information related to the ad market. Justice had alleged that the broadcasters — and, in the case of CMG, its CoxReps ad-rep firm — illegally shared information that harmed the spot ad market.

Given those issues, the FCC “cannot rely on a single-paragraph assurance about Applicants’ behavior,” ATVA asserted. Instead, it said the FCC should include a provision explicitly preventing the parties from “jointly negotiating retransmission-consent agreements for stations in the same market through collusive actions, such as by sharing retransmission consent terms and fees for any of their broadcast stations with each other.”

ATVA said the FCC “should also promulgate the kind of reasonable enforcement mechanism based on the Sinclair consent decree,” which the group proposed in its initial comments and it said should be no sweat if the applicants’ statement about their intentions regarding retransmission consent is believable. ▪️

 Standard General CEO Soo Kim said he doesn’t understand the opposition to his company’s $5.4 billion acquisition of Tegna.

Petitions questioning the deal have been filed with the Federal Communications Commission by cable groups, public-interest organizations, unions and even a competing station group.

One of the concerns raised in the petitions is the role of private-equity giant Apollo Global Management, which controls station owner Cox Media Group and is involved in financing Standard General’s deal. In particular, it is claimed Apollo would work with Standard General to put pressure on cable operators in retransmission consent negotiations and consolidate newsrooms in markets where both own stations.

Kim told Broadcasting+Cable that he and Standard Media CEO Deb McDermott have a record of investing in the stations they have bought over the past decade that should outweigh any issues raised by Apollo, a relative newcomer to the broadcast business.

“I guess they cast a larger shadow,” he said. “Look, this is our deal. To say this is about Apollo is almost like shading Deb and myself. I just don’t understand it.”

In particular, Kim said he was surprised by the petition filed by Graham Media Holdings, which was concerned about the possibility that Standard General and Apollo’s Cox Media Group would control four network-affiliated stations in Jacksonville, Florida, where Graham also owns a station.

Station owners rarely criticize other broadcasters’ deals, Kim said. “I’ve never seen a broadcaster file against another broadcaster,” he asserted. Other observers believed Graham's action was unusual if not unprecedented.

Kim was also taken aback by petitions from unions, including the NewsGuild and the Communications Workers of America. He said Standard General has worked well with unions. While the NewsGuild has just a handful of members at Tegna stations,  Standard General has said it doesn’t plan any newsroom cuts and McDermott sent a note to employees emphasizing Standard General’s commitment to stations and local news.

Also: Standard Media’s Deb McDermott Cites Track Record Amid Challenges to Tegna Deal

”We hope to dialogue with them and figure out what’s going on,” Kim said. If there was a problem between the union and Tegna, “we will hope to improve on any relationship in the past.”

Kim said he thinks some of the opposition to the Tegna deal is coming from parties interested in acquiring Tegna or some of its stations, rather than being about the public interest, and that Apollo’s involvement was just an excuse to criticize the transaction.

Apollo’s Role

“Look, this is our deal,“ he said. ”We own 100% of this company. Apollo is one of 12 banks and preferred financing sources. I don’t work for other people.”

Tegna was too big for Standard to buy by itself and Apollo wanted to buy some of the Tegna stations. Kim said that Apollo was involved in the bidding for Tegna before Standard General got involved. He said Standard General didn’t bring Apollo into the deal. 

“We’ve operated stations for years and years. People should know what they get with us,” he said.

“What they’ll get is a company with a minority owner, run by a woman, that’s committed to serving diverse communities,” Soo said. “We think that’s good business.”

Kim said he respects the regulatory process. “Large deals typically get a little bit more scrutiny from all parties,” he said. 

But other big deals — like Gray Television’s acquisition of the Meredith local stations — have sailed through in a matter of months without comment from the parties opposing the Tegna sale. Gray’s deal and Nexstar Media Group’s earlier acquisition of Tribune Broadcasting consolidated the industry, while Standard General’s would do the opposite because Tegna’s stations in Dallas are being sold to Apollo’s Cox Media Group. 

“I don’t see any real legal, regulatory or precedential reason” why the deal would not be approved, he said. “We specifically designed this deal so we weren’t asking for anything special. We’re not asking for any waivers. This is literally right down the middle of the fairway.”

Nevertheless, Kim maintains that the opposition hasn’t knocked Standard General off schedule. The review process is still “well within the bounds of  that we have both expected and allocated.” While calling himself “patient,” he said “We’re eager to get our work started. We have some really interesting plans which we’re also happy to share with regulators. This is an industry that needs to evolve, that needs to continue to push forwards, and we’re just looking forward to doing that.”

Still a Good Deal

Since Standard General agreed to buy Tegna in February, the stock market has plummeted and inflation has cast a shadow over an economy already weakened by the pandemic.

But Kim maintains paying $5.4 billion — or $8.6 billion including debt — for Tegna is a good deal.

“Absolutely,” Kim said. “We didn’t buy this to do a quick flip. We believe that broadcast television is at a crossroads and it needs to decide what it needs to be. But I think that the opportunity set is huge.”

The Tegna stations will benefit from being part of a private company unconcerned about quarterly earnings, Kim said. “That will actually give us a little bit of headroom and the breathing space a company needs to think about the future,” he said. “The industry requires some evolution. It can’t be locked into the past. And we think a private structure is the optimal way to get from point A to point B.”

“I think the future is bright for local video journalism,” he said. “Local content is more important than ever and something that’s free and ubiquitous is meaningful.” 

Kim describes Standard General as a “representative company.” 

“A representative company is actually the best company, because a company that most closely resembles its audience can deliver on its customer promise best,” he said.

The company’s staff should reflect its audience, management should reflect the team members and the board should reflect the management team, he said. “I’m not doing this to check a box,” he said. “It’s my strong belief that it’s good business.”

Kim noted that Tegna has faced some complaints from Black and Latino journalists in the past.

Community Access

“We’re going to solve this problem,“ he said. ”We’re going to outreach these groups and look at the situation on a station-by-station, market-by-market basis and make sure that we are representative and that local community voices are heard.”  

Kim said the company has a plan that looks a bit like the community access cable operators offer. Standard Media stations will find time to open their studio to community journalists and give them airtime. 

“We only use our tools some of the hours of the day,” he said. “So in the time we’re not using them, maybe we should open up some of those tools for the community so they can put up high-quality product on the air and increase the voices in our market. 

Kim said his relationship with TV started when he emigrated to the U.S. in 1980. “My parents didn’t know how to speak English and neither did I. I learned English by watching TV, watching Sesame Street and The Electric Company. I believe in the power of broadcast to do good for society. " ■ 

The NewsGuild-CWA is asking President Joe Biden to urge the FCC to block the purchase of Tegna TV stations by investment fund Standard General and Apollo Global Management.

The guild, the nation's largest union representing journalists, told the president in an open letter circulated widely Thursday (June 2) that the deal “would kill journalism jobs, undermine local news and raise prices for American families.”

NewsGuild-CWA has already asked the Federal Communications Commission to collect more data on the deal before making a decision on whether it is in the public interest.

Also: Tegna Deal Critics Say FCC Needs More Data

In the meantime, it wants Biden to give the commission some direction, though that by definition would have to be short of marching orders.

“Mr. President, you can do something to protect workers, journalists, local news, and hard-working families,“ the guild said. “Please urge the FCC to reject the Apollo/Standard General/Tegna deal.”

The FCC is an independent agency and is charged with making its public interest calls on mergers based on the facts before it. But there is plenty of precedent for Presidents making their feelings known, including President Barack Obama, who called on the FCC to adopt net neutrality rules based on a Title II classification of internet access, and President Trump, who called for regulating edge providers to prevent what he said was anti-conservative bias.

Tegna owns 64 television stations in 51 U.S. markets. It also owns multicast networks True Crime Network, Twist and Quest and advanced-advertising company Premion. ■

Roku has been on a rugged roller coaster ride in recent months as it faces the limits of its dominant U.S. market position amid an ebbing pandemic. Now, the streaming company is partnering with “alternative investment”giant Apollo Global Management to acquire a slice of Starz, the Lionsgate-owned premium cable service. 

The deal promises to expand Roku’s modest library of original programming (Quibi leftovers won’t do it by themselves), and entree into legacy cable and subscription streaming. 

The real question is whether such a deal, for one-fifth or less of a decidedly niche content and streaming service provider, can make Wall Street care. There are reasons for skepticism, but also the possibility that this is the beginning of something much bigger.  

Like so many tech companies, Roku was an early-pandemic darling of the Street, supremely positioned to benefit from locked-down customers with little to do but play games, learn TikTok and guitar, and watch lots of streamed video. Just as the lockdown hit the United States, Roku shares sold for $76 apiece, substantially down from the previous fall. 

Fast forward to February, 2021, in the pandemic’s winter resurgence, and shares had leapt nearly 500%, to $468. They would crest even that vertiginous level a few months later, amid the summer virus comeback. These days, shares are around $96, notably above 26 months ago, but still far below even the fall of 2019. 

More problematically, Roku’s fall from Wall Street grace is about more than a rapidly evolving virus and how we’re responding to it. 

Also read: Roku Reports Q1 Net Loss, Decelerated Revenue Growth of Just 28%, But Beats Forecasts 

Roku indeed owns an admirable chunk of the streaming video universe, adding another 1.2 million active accounts, bringing to 61.3 million the worldwide users of its streaming devices and smart TV interfaces. The other part of its business, ad revenues on the Roku Channel and elsewhere, is up 39% year over year (to $233 million). Hours streamed is up 14%. 

Nice. But also, complicated.

Turns out that around 90% of Roku accounts are in North America. That’s a problem when just about everyone in North America already seems to have a streaming setup, and many are dropping dongles such as the classic Roku pucks and sticks to buy connected TVs with built-in interfaces. 

Just like Netflix, Roku faces home-market saturation amid growing competition from deep-pocketed, diversified competitors such as (we’ve heard this before) Apple, Amazon and Alphabet, plus that new Comcast-Charter tie-up. 

Yes, Roku CEO Anthony Wood talked a good game at Morgan Stanley’s investor conference in March, saying “Once Roku enters a market outside the U.S., our share starts to grow.” 

And yes, long-time Roku bear and Guggenheim analyst Michael Morris recently upped his target price by $10, saying the company’s international expansion is in its "early innings.” 

That’s all true. But is it enough to substantively displace Google/Android TV, Samsung, LG, Sony, Amazon, and endless cheap Android-based knockoffs around the planet? Probably not.

Targeting consumers in Europe and Latin America is a potential opportunity for more hardware sales, but what about India, the rest of Asia and Africa, where much of streaming video’s growth will come in the future? Even Roku’s cheap devices might face pricing pressure.

Supply chain headaches apply here too, as with any hardware maker. Smart TV shipments will drop 13% in the United States this year, so it’s getting more expensive and slow to make and ship devices around the planet. That will pinch margins. 

Meanwhile, Lionsgate has been trying to sell itself, or just Starz (as of last November), for what seems like eons, with no takers. That muted response in an overheated era says something about the market’s regard for Lionsgate’s assets and asking price. 

This past week, during the SeriesFest in Denver, long-time Lionsgate CEO Jon Feltheimer suggested other ways for Lionsgate to make itself more relevant, like resuscitating a proposed partnership with Netflix over three Knives Out movies. 

Lionsgate would theatrically distribute the two sequels (still in production) and Netflix would get to stream the hugely popular original. Netflix turned down Felt’s original proposal, but with Big Red suddenly in a different frame of mind, he said he’ll pitch the deal again. 

Lionsgate, like Sony, has been an “arms dealer,” profitably producing numerous shows for Netflix, HBO, Discovery and others. 

Starz, which Lionsgate acquired in 2016, has been equally scrappy, catering to dedicated Black and female audiences with fan-favorite franchises such as Power and its many spinoffs and Outlander. The service attracted some recent buzz with behind-the-scenes Watergate tale Gaslit, starring Julia Roberts as Martha Mitchell. Another promising show, horror-comedy series Shining Vale, featuring Courtney Cox and Greg Kinnear, just debuted.  

The key to all this may be Roku’s partner, Apollo. It has $48 billion in available cash for deals, with $513 billion in total assets under management, up 11%, according to last week’s quarterly earnings filings. Just the cash-on-hand total dwarfs any of the other companies involved in this potential deal.

And Apollo is no newcomer to entertainment. It tends to buy into companies with decent balance sheets that are part of declining industries. Previous deals include Cox, Endemol Shine, Gannett, Sirius XM, Redbox and Yahoo. That Starz (and for that matter, Roku) is potentially on that list probably says something important.

Does Apollo become the glue (and money) that binds a couple of smaller streaming players into one, more vertically integrated operation? Way too soon to tell. But the fact that Roku, looking for more reach, and Lionsgate, looking for more cash, are now in conversation with Apollo as backer suggests a much bigger deal may be on the horizon. 

Roku has partnered with private equity company Apollo Global Management to make a joint bid for a piece of premium cable brand Starz.

As first reported Tuesday by The Wall Street Journal, and confirmed by the Penske Media Company Showbiz Trade Monopoly, Roku and Apollo are looking to secure as much as a 20% stake in Starz, which was acquired by Lionsgate in 2016 for $4.4 billion. 

The first round of bids reportedly occurred several weeks ago, and DirecTV was said to also be interested in Starz. 

Neither Roku, Apollo or Lionsgate has publicly commented on any of this. But Lionsgate now has a market capitalization of only around $3 billion and is said to be looking for ways to unlock the asset value in its Starz, via spinoff or other mechanism. 

Perhaps not unnoticed by Lionsgate CEO Jon Feltheimer and his management team: Amazon recently closed on an $8.45 billion deal for MGM, certainly a premium price for the century-old Hollywood studio. 

Meanwhile, AT&T’s strategy of spinning off DirecTV and WarnerMedia, getting those assets off the books while still enjoying majority stakes in them, might also loom large for Lionsgate. 

As for Roku, it has watched its market capitalization dwindle to just more than $14 billion, nearly a fifth of where it stood last summer, with investors suddenly unsure of its ability to outcompete Amazon and Google long-term for the position of “gatekeeper” to the global connected living room. 

Lately, Roku has also had trouble convincing Wall Street it can be also be a future force in advanced advertising — an expensive quest that will require plenty of original content.

Owning a piece of a content company, however, might help that cause. 

Roku said its AVOD play, Roku Channel, now reaches 80 million homes. Roku recently signed an agreement with Lionsgate to program Roku Channel with Lionsgate films when they finish their pay 1 window run on Starz. Roku also worked with Lionsgate to re-establish canceled NBC series Zoey's Extraordinary Playlist on Roku Channel. 

For its part, Apollo Global recently purchased Verizon's media assets, as well as a piece of film studio Legendary Entertainment. 

Premium cable brand Starz produces such hit original series as Outlander and Power. Starz finished 2021 with 19.7 million subscribers to its direct-to-consumer streaming service, Starz Play. ■

The NewsGuild, a union representing journalists, is raising questions about Apollo Global Management's role in financing Standard General’s proposed $8.6 billion acquisition of Tegna that it thinks the Federal Communications Commission and the Department of Justice should consider before approving the deal.

The union, part of the Communications Workers of America, said its first concern is further erosion of local journalism and newsroom jobs being lost. It noted that as private equity firms have acquired newspaper companies, they have eliminated the jobs of thousands of journalists. 

“What will it mean to the future of local journalism if private equity firm Apollo finances the acquisition of Tegna?,” NewsGuild president Jon Schleuss asked in a post on the union’s website Friday. ”Will it use its financial position and influence to fire local broadcast journalists around the U.S.”

Also: Standard General Says Change Will Be Good for Tegna

Schleuss also questioned why Tegna’s new owner is asking the FCC for waiver of its foreign ownership rule. He argues that in order to obtain a waiver it should make a commitment to preserve local journalism.

In addition, he notes that Apollo itself is a station owner and that the deal appears to be structured to avoid broadcast-ownership caps.

“How do Apollo’s major debt and equity investments totaling over $1.7 billion not lead to shared ownership or control of Apollo’s and Tegna’s stations, resulting in far more than 39% national coverage? Does the debt include rights to acquire Tegna stations in the event of a default, which again would violate the 39% cap? Do current market conditions, including inflation and supply chain problems, raise the risk of such default? Do the equity investments include governance rights of any kind, or terms and conditions that would increase Apollo’s influence over time? And even if the applicants argue that their deal meets the letter of the law, does the proposed structure lead to de facto control by Apollo and the violation of the spirit, if not the letter, of the 39% cap,” Schleuss wrote.

Finally, Schleuss asked if the transition will raise consumer prices as the newly acquired Tegna stations seek higher retransmission fees from cable and satellite distributors. ■ 

Apollo Global Management said Wednesday that it has completed its purchase of internet icon Yahoo -- formerly Verizon Media -- for about $5 billion, from Verizon Communications. As part of the deal, Verizon will retain a 10% ownership interest in the new company.

Verizon and Apollo first announced the deal in May, and the sale includes ad tech assets.

Verizon bought Yahoo in 2017 for about $4.5 billion and later combined it with another iconic internet brand AOL -- which it purchased in 2015 for $4.4 billion  -- into a new entity called Oath. Oath was renamed Verizon Media in 2018, shortly after the telco took a $4.5 billion write-down on the unit. 

“We look forward to partnering with Yahoo's talented employee base to build on the company's strong momentum and position the new Yahoo for long-term success as a standalone consumer internet and digital media leader,” Apollo partner Reed Rayman said in a press release. “We couldn’t be more excited about this next chapter for Yahoo as we look to invest in growth across the business, including accelerating its customer-first offerings and commerce capabilities, expanding its reach and enhancing the daily user experience.”

Verizon Media CEO Guru Gowrappan will continue as CEO of Yahoo under its new owners.  

“This is a new era for Yahoo,” Gowrappan said in a press release. “The close of the deal heralds an exciting time of renewed opportunity for us as a standalone entity. We anticipate that the coming months and years will bring fresh growth and innovation for Yahoo as a business and a brand, and we look forward to creating that future with our new partners.”

 Shares of Lumen Technologies, formerly CenturyLink, fell as much as 13% Wednesday, a day after it said it had agreed to sell a large chunk of its incumbent local exchange (ILEC) business to private equity firm Apollo Global Management in a deal valued at $7.5 billion.

Lumen shares were trading as low as $11.09 each early on Wednesday (Aug. 4), down 13% ($1.66 per share). The stock closed at $11.62 each (down 8.9%, or $1.13 per share) on Aug. 4. 

On Aug. 3, after the market close, Lumen said it had agreed to sell its ILEC assets in 20 states to Apollo, a move that came about a week after it said it would sell its Latin American business to another private equity firm -- Stonepeak Infrastructure Partners -- for $2.7 billion. 

CenturyLink rebranded as Lumen Technologies last year, the first step in preparing the company for what it called The Fourth Industrial Revolution. With the Apollo deal, Lumen sheds local telephone and copper-based broadband businesses with about 6 million customers to focus more intensely on its large enterprise and residential broadband customers, and invest in expanding its fiber network in its remaining 16 states of operation.  

According to Lumen, the properties being sold to Apollo include about 200,000 fiber-enabled units, 7 million addressable locations, 1.3 million broadband subscribers and 59,000 fiber customers. 

After the deal closes, Lumen will have 21 million enabled units, 2.4 million fiber enabled units, 3.4 million broadband subscribers and 687,000 fiber subscribers.   

In a research note, Evercore ISI Group cable, telecom and satellite analyst James Ratcliffe said the moves appear to be an effort by Lumen management to “dramatically reorient the company” by shedding declining high cash flow businesses, sharply increase capital spending and change how it returns capital to its shareholders by reducing or possibly eliminating its stock dividend in favor of share repurchases.  

“We see the moves as an attempt to restructure the company into the kind of fiber infrastructure business being rewarded with high multiples by both public and private market investors,” Ratcliffe wrote. “Given the uncertainty about the company’s strategy, and the disruption of the business and the shareholder base likely to result from this strategic reorientation, we’re staying on the sidelines, and retaining our ‘Underperform’ rating.” 

While Lumen didn’t officially reduce or eliminate the dividend, CEO Jeff Storey said on a conference call to discuss the transaction that the new strategy will put pressure on the dividend.

“[W]ith these transactions, the profile of our business is changing and will change rapidly going forward as we lean into investing for growth and continuing to rationalize the portfolio,” Storey said on the call. “I do realize that will put pressure on our dividend after we close these transactions and the further we get into our investment program.”

That was enough for Ratcliffe, who said at least a reduction is likely after the deal closes.

“We interpret this to mean that the dividend is likely to be materially reduced or eliminated, but that management aren’t taking that step yet, in the absence of certainty that the proposed transactions will be completed,” Ratcliffe wrote. 

While that would be enough to explain the volatility in the stock, Lumen’s sluggish Q2 results added to the pressure. Revenue of $4.9 billion during the quarter came in 2% below Ratcliffe’s estimates and cash flow of $2.1 billion was slightly below the analyst’s forecasts. However, free cash flow was nearly 30% above Evercore predictions, mainly because capital expenditures of $646 million were far below estimates of $899 million.

Apollo intends to invest heavily in the networks to upgrade them to fiber-optic technology. The new unit will be run by former Verizon Communications executives Bob Mudge, Chris Creager and Tom Maguire, who helped create that phone company’s Fios broadband business. 

“This transaction is an important step in our continued efforts to transform Lumen and drive future growth for our company,” Storey said in a press release, pointing out the strong valuation of the deal (5.5 times cash flow). “Apollo Funds will receive a great business with a strong customer base, dedicated employees, and a platform for future growth.” 

The transaction is expected to close in the second half of 2022.

"The team at Lumen has built a great business and we see an incredible opportunity to provide leading edge, fiber-to-the-home broadband technology to millions of its business and residential customers,” Apollo private equity partner Aaron Sobel said in a press release. “Our investment will help accelerate the upgrade to fiber optic technologies, and we are excited to have such a high-caliber management team ready to bring faster and more reliable internet service to many rural markets traditionally underserved by broadband providers.”

Citi, Goldman Sachs, Bank of America, and Morgan Stanley served as financial advisors to Lumen in the transaction and Jones Walker served as legal counsel. Advisors to the Apollo Funds include Mizuho, LionTree, Barclays and Credit Suisse as financial advisors; Altman Solon as telecommunications, media and technology consultant; and Paul, Weiss, Rifkind, Wharton & Garrison LLP as lead legal counsel, together with Jenner & Block LLP and Morgan Lewis & Bockius LLP as regulatory counsel. 

Verizon’s $5 billion deal to divest its media holdings to Apollo Global Management Monday culminates one of the most disastrous sprees of corporate wealth destruction in telecom history, perhaps only rivaled by wireless giant peer AT&T and its even more calamitous $49 billion DirecTV gambit.

Under former CEO Lowell McAdam, Verizon spent more than $10 billion on ill-fated acquisitions and doomed product launches from 2014 to 2017, in an effort to build a dominant mobile media business that never ended up taking off. 

Here are 11 events and happenings that led us to Monday’s fire sale to private equity:

January 2014 - Verizon pays a reported $200 million for Intel’s OnCue online video technology assets, which it will use to power its upcoming mobile video platform Go90. “The OnCue platform and team will help Verizon bring next-generation video services to audiences who increasingly expect to view content when, where and how they want it,” McAdam said at the time.

June, 2015 - Verizon closes its $4.4 billion purchase of AOL. “We did start out with a number of discussions around a joint venture, but we quickly saw there was a vision that we both believed in where we could be the No. 1 global media technology company, and if we put our assets together, we thought we could make something very, very big out of this,” Marni Walden, Verizon’s president of product innovation and new businesses, told CNBC’s Squawk on the Street.

September 2015 - Verizon launches mobile video service Go90 with a star-studded Las Vegas party featuring a performance by Kanye West. Verizon bases the product name after the common mobile user practice of tilting a smart phone 90 degrees to profile view when watching video. Go90 is the first but will not be the last failed mobile video venture to hook much of its value proposition to that behavior. 

April 2016 - Verizon pays $159 million for a 24.5% stake in online video company AwesomenessTV. Verizon plans to deploy AwesomenessTV’s short-form content onto Go90. That same month, the telecom also hired former NBCUniversal executive Chip Canter to oversee Go90. Media pundits and investors are starting to wonder if Go90 is really achieving its goal of supplying millennial audiences with the bite-sized mobile video bites they supposedly demand.

October 2016 - Verizon pays an undisclosed sum for Vessel, a subscription video service founded by former Hulu CEO Jason Kilar, who now, of course, runs WarnerMedia for AT&T. Vessel hired a number of YouTube stars and other online video celebrities, offering early access to their videos for $2.99 a month. It raised more than $130 million in funding from investors including Benchmark, Greylock, Bezos Expeditions and Institutional Venture Partners. Verizon quickly shutters Vessel, saying it's going to use the company’s software and technology to help boost the struggling Go90 platform. 

April 2017 - With Go90 failing to catch on with consumers, Canter is pushed out, and Vessel CEO Richard Tom is put in charge of the struggling mobile video platform. 

June 2017 - Verizon closes its $4.48 billion purchase of Yahoo. After around 2,100 Yahoo jobs are slashed, the acquisition is grouped with AOL under the operating unit name Oath Brands, with AOL chief Tim Armstrong put in charge of the operation. Yahoo CEO Marissa Mayer is sent packing with a $23 million severance package. “The close of this transaction represents a critical step in growing the global scale needed for our digital media company,” Walden said. “The combined set of assets across Verizon and Oath, from VR to AI, 5G to IoT, from content partnerships to originals, will create exciting new ways to captivate audiences across the globe.” Oath gathers ridicule among media pundits, who compare it, unfavorably, to Tribune Publishing Company’s awkward Tronc brand.

June 2018 - With the platform only averaging around 17 million monthly active users, Verizon shutters Go90 after spending a reported $1.2 billion on the service. Go90’s staff, technology and other assets are folded into Oath Brands. 

August - 2018 - Verizon CTO Hans Vesterberg, formerly a top Ericsson executive, is named CEO of Verizon, ushering in a new priority set that emphasizes 5G connectivity, while decisively downplaying the media business.

March 2019 - Verizon announces that it will close its Oath Ad Platform ad server as part of the telco’s strategic review of its media business. The closure is part of a downsizing that entails a 7% reduction in Oath headcount. 

May 2021 - Apollo Global Management agrees to buy Verizon’s media business, including its ad-tech assets, for $5 billion. Verizon will retain a 10% interest in the business.

Apollo Global Management agreed to buy Verizon’s media business, including its ad-tech assets, for $5 billion.

Verizon Media will be known as Yahoo when the transaction closes and Verizon will retain a 10% stake in the company, which will be run by current CEO Guru Gowrappan.

Apollo Global, which manages billions in assets, is already in the media business having bought Cox Media Group.

Verizon built its  media business by acquiring  AOL for $4.4 billion and Yahoo for $4.5 billion and combining them to form the digital media company Oath. It launched the video service Go90, which failed, and took a $4.6 billion impairment charge in 2018.

Verizon Media used the data from its digital media platforms to power ad tech assets like Adap.TV and Brightroll.

Ad tech companies have been proving their value lately, either through public offerings like Viant and DoubleVerify or by being acquired, like SpotX. Private equity has also been pouring money into the ad tech space.

Last week Verizon Media announced a deal to work to exclusively use Vizio’s data to target ad campaigns in the booming connected TV market. Verizon provides a supply-side platform for media companies looking to monetize their CTV assets.

“We are thrilled to help unlock the tremendous potential of Yahoo and its unparalleled collection of brands,” said Reed Rayman, Private Equity Partner at Apollo. “We have enormous respect and admiration for the great work and progress that the entire organization has made over the last several years, and we look forward to working with Guru, his talented team, and our partners at Verizon to accelerate Yahoo’s growth in its next chapter.”

Also Read: Verizon, Innovid, BrightLine Join for Interactive CTV Ads

Verizon Media reported strong, diversified year-over-year revenue growth the past two quarters, driven by innovative ad offerings, consumer ecommerce, subscriptions, betting and strategic partnerships, Verizon said.

“We are excited to be joining forces with Apollo,” said Gowrappan. “The past two quarters of double-digit growth have demonstrated our ability to transform our media ecosystem. With Apollo’s sector expertise and strategic insight, Yahoo will be well positioned to capitalize on market opportunities, media and transaction experience and continue to grow our full stack digital advertising platform. This transition will help to accelerate our growth for the long- term success of the company.”

Verizon Media will be known as Yahoo when the transaction closes and Verizon will retain a 10% stake in the company, which will be run by current CEO Guru Gowrappan.

Apollo Global, which manages billions in assets, is already in the media business having bought Cox Media Group.

Verizon built its media business by acquiring companies like AOL and Yahoo and using their data to power ad tech assets like Adap.TV and Brightroll.

Ad tech companies have been proving their value lately, either through public offerings like Viant and DoubleVerify or by being acquired, like SpotX. Private equity has also been pouring money into the ad tech space.

Last week Verizon Media announced a deal to work to exclusively use Vizio’s data to target ad campaigns in the booming connected TV market. Verizon provides a supply-side platform for media companies looking to monetize their CTV assets.

“We are thrilled to help unlock the tremendous potential of Yahoo and its unparalleled collection of brands,” said Reed Rayman, Private Equity Partner at Apollo. “We have enormous respect and admiration for the great work and progress that the entire organization has made over the last several years, and we look forward to working with Guru, his talented team, and our partners at Verizon to accelerate Yahoo’s growth in its next chapter.”

Also Read: Verizon, Innovid, BrightLine Join for Interactive CTV Ads

Verizon Media reported strong, diversified year-over-year revenue growth the past two quarters, driven by innovative ad offerings, consumer ecommerce, subscriptions, betting and strategic partnerships, Verizon said.

“We are excited to be joining forces with Apollo,” said Gowrappan. “The past two quarters of double-digit growth have demonstrated our ability to transform our media ecosystem. With Apollo’s sector expertise and strategic insight, Yahoo will be well positioned to capitalize on market opportunities, media and transaction experience and continue to grow our full stack digital advertising platform. This transition will help to accelerate our growth for the long- term success of the company.”

AT&T's federal relations staff was making its case on Capitol Hill Friday for why the company, and its video viewers, were the aggrieved parties in its retransmission consent dispute with Cox Media Group and parent Apollo Global Management.

According to a source, the two sides continued to negotiate as AT&T reached out to legislators and Hill staffers, specifically staffers in offices of legislators whose constituents were affected by the blackouts, as well as the appropriate members of the Senate Commerce and House Energy & Commerce Committees that oversee communications issues. 

Also Read: Cox Media Stations Get Blacked Out on AT&T

According to a copy of an e-mail to those legislators and Hill staffers providing an "Update on Negotiations with Cox Media Group" obtained by Multichannel News and Broadcasting + Cable, AT&T said that DirecTV customers in five Cox markets would lose their "preferred access" to the Super Bowl Feb. 7. (AT&T conceded that CBS and the NFL would both be live streaming it.)

AT&T said that did not have to be the case. "We are committed to continuing to negotiate with CMG to come to a resolution that is good for our customers," it said, but urged CMG in the meantime "to immediately return its local stations to our customers while we negotiate." 

Also Read: AT&T Pushes Ways to Watch Super Bowl Despite CMG Blackout

Broadcasters argue that the rise in retransmission consent fees is because their high-value content is finally getting a market rate after years of being undervalued. They also argue that blackouts, or as they see them, the removal of a signal when the contract for its carriage expires without a new contract at a fair price, is a negotiating tool it would be unfair for the government to deny them. 

"[I]n the midst of an ongoing pandemic and just before Super Bowl LV, CMG pulled its stations from our DirecTV, U-verse, and AT&T TV customers," AT&T told Congress.

Also Read: Congressman Jared Huffman Calls on Cox to Restore Channels

The company said it had agreed to pay retroactively whatever rate they eventually agreed on in continuing negotiations (called a "true up") if CMG had continued to provide them the signal during those negotiations, but that, instead, "CMG put our shared customers into the middle of a private business matter by intentionally blacking out local stations in 20 markets," and "in the midst of an ongoing pandemic" as well as on the eve of the Big Game.

Given that legislators hear it from their constituents when there are blackouts that affect their districts, then let the companies hear it, AT&T wanted to make it clear that "without CMG’s consent, AT&T cannot retransmit its stations to our customers....We share our customers’ frustration and recognize it’s time to end this cycle of increasing fees and ongoing blackouts."

Also Read: ATVA Urges Retrans Reform

The letter cites National Association of Broadcasters President Gordon Smith, himself a former member of Congress, and assurances he gave during a C-SPAN interview that broadcasters “recognize the public responsibility to not have service interruptions during this time.” But Smith also said in that interview that it takes two and he hoped "the MVPDs share that same public spiritedness and give broadcasters fair value." 

"Stations owned by CMG and their parent company, Wall Street mammoth Apollo Global Management, have previously staged blackouts at the most inconvenient times for customers," AT&T told legislators. "But their decision to do so now – in the middle of a pandemic and just prior to the Super Bowl – represents a new low in the never-ending cycle of higher fees and blackouts."

Steve Pruett, chairman of Cox Media Group (CMG), thinks the local broadcast business still has some life in it, with potential to do much more.

The core of what stations do hasn’t changed much for 70 years, said Pruett, a former Sinclair Broadcast Group executive who advised Apollo Global Management before it bought the Cox stations for about $3 billion in 2019.

“I take great exception with people who think our business is declining,” he said. “It’s only declining because we failed to find new ways to do things.”

The pandemic has dampened merger and acquisition activity, slowing Apollo’s drive to scale up by buying more stations. But Apollo is encouraging CMG to invest in innovations that produce profitable revenue.

“The great thing about Apollo is they don't shy away from investing in something if you show  them it's accretive,” Pruett said. “They want accretive growth. They want to know, what are the parts of the model we need to invest in and what are the parts of the model we need to make more efficient?”

Most of those innovations Cox Media Group is exploring move the traditional broadcast business deeper into digital media. While Sinclair has built a centralized streaming platform for its stations, called Stirr, Cox Media Group has focused on making stations accessible individually, particularly over via smart TVs and connected devices. 

The results have been robust, according to Pruett. “At any given time, 10% of our audience is probably streaming, and it’s growing as a percentage,” he said.

“It’s important for us to make ourselves available to our viewers who want to view in other ways,” he said, noting that for the Cox Media Group stations, streaming views and video starts spiked as the election neared.

The viewers who came in via digital media were younger than traditional local TV viewers, and in many cases were not existing TV viewers.

Luring Nontraditional Viewers

“In Atlanta, where CMG owns WSB-TV, we’re seeing about 20% to 25% of those viewers don’t view any television stations there,” Pruett said. “We are capturing viewers that are not using linear television the traditional way.”

At some point, CMG might create a consolidated streaming platform for its stations, he said. “TV broadcasters should be really understanding these platforms and optimizing those platforms,” he said.

CMG is able to monetize those viewers, making streaming profitable. But it could be doing better, Pruett said. CMG is also looking to transform its advertising business.

“We have a very archaic way of selling. Should we have more automation in the way we prospect for new business? Do our sellers need more technologically advanced ways to mangage their time? The answer for all of this is yes,” he said.

A problem for the local station business is it has yet to come up with a standardized, automated way to connect with agency media buyers.

“Broadcasters have this fear of programmatic driving down the rates,” Pruett said. “Don’t call it programmatic. Call it automated buying. It’s very close, but it’s not there because there’s no agreement for how to get it there among broadcasters. It’s got to get there.”

Beyond advertising, Pruett talks about maximizing the value of what stations put on the air. A key to doing that is turning the station’s viewers into users through ecommerce. CMG stations work with the TV shopping service Knocking to put a local version of a show called Steals and Deals on the air that lets viewers buy items being shown in the studio.

“We’re making a lot of money with it,” Pruett said. “Meredith is on board. A couple of other broadcasters are testing it. It’s working for us.”

That’s one example of how what’s good for CMG’s stations can be good for broadcasting overall. Pruett said he’s interested in ways broadcasters can get together legally to set standards and share best practices without colluding or being anti-competitive.

Building Scale Together

“Stations ought to be able figure out a way to aggregate their viewers so they compete on a national scale,” he said.

Station groups might be able to work together on programming. They could provide news nationally, covering events in the straightforward way local newscasts report on local happenings. Pruett notes that during the pandemic stations in Georgia all got together to carry the COVID press conferences. “That commitment to community service makes local broadcast unique among media outlets.”

Nexstar Media Group is doing something like that with its three-hour News Nation newscast, featuring reporting from its stations and airing on its cable channel WGN America. “It’s not easy,” Pruett offered. “And I think they’re doing it well.”

Working together, station groups could compete with conglomerates like Comcast and Disney, he said. They could do that by banding together to create content that would be unique to local television, either by making it themselves or hiring a studio to produce it.

This is particularly important at a time when the big media companies are focused on streaming, potentially reducing the resources going to the traditional linear broadcast networks that affiliates depend on.

“I think local broadcasters have spent too much time not thinking big enough,” Pruett said. “If the day comes when we all have to go on without networks, why wouldn’t we just create our own networks amongst ourselves? We’re all big, powerful companies.” λ

Gamut, the advanced advertising company acquired by Apollo Global Management when it bought Cox Media Group, said it will use iSpot.tv to measure TV ad campaigns.

Gamut said it will use iSpot's cross-platform TV data, which unifies both traditional and over-the top viewing, to document the incremental reach of the local OTT campaigns Gamut sells. 

As OTT and connected TV usage has increased during the pandemic, advertisers have been looking to reach streaming viewers, but have been demanding better measurement of campaigns, including data about whether streaming ads are reaching viewers who have cut the cord or aren't watching traditional TV.

With iSpot, Gamut can target and reach qualified local OTT audiences, which generate website visits, foot traffic, brand lift and co-viewing at scale for clients.

"Marketers today have many options with regards to how they spend their ad dollars. As OTT continues to grow at an incredible pace, we are now able to provide our advertisers with the data that they need to measure the true incremental reach of their OTT campaigns,” said Soo Jin Oh, co-COO at Gamut.

Gamut started selling local OTT campaigns three years ago when few were in the field. It created Gamut Total by making deals with premium video providers that give it priority access to inventory not typically available to programmatic buyers.

Though Gamut is related to Cox Media Group, it sells local campaigns in all 210 markets, not just those where CMG owns stations.

Oh said the iSpot data will help Gamut distinguish itself from other OTT companies.

“We chose iSpot because we play in the local space and a lot of competing solutions using ACR technology were built for national. A lot of them don’t have the scale to do small markets,” she said. 

“Unified measurement in and of itself is super innovative,” said Stuart Schwartzapfel, senior VP, media partnerships at iSpot.TV. “We’re doing this at great scale and we’re doing it in a very precise manner that meets the needs of Gamut’s regional and local advertisers.”

Having better data will help marketers decide how much money they ought to be spending on OTT. It will also help track and reduce the frequency with which viewers see some individual ads, improving the consumer experience.

“Data is only powerful if it’s actionable,” Oh added. With some data companies, a report costs five figures and isn’t delivered until after a campaign has run. “When you’re working with iSpot, it’s real time,” she said. The data is part of the Gamut dashboard as value added.

The local OTT is also a good fit for political advertisers and this is going to be a record setting year for campaign spending. “Political is a big business. We’re fortunate to be seeing that right now,” said Oh.

Gamut is integrating the iSpot data into its tech stack and the dashboard clients use to monitor tier campaigns. “We’re already integrated with MediaOcean, Strata, HudsonMX. Prisma is coming up soon,” she said, ticking off the major buying platforms.

“We want to make buying Gamut a very easy process,” Oh said. “That’s the key when you’re playing in the local space, which can be cumbersome."

Gamut also wants to add more outcome data to its platform.

Finally it wants to take the data it has already accumulated and make it ready to be used by artificial intelligence and machine learning to predict consumer behavior.

More than a dozen Cox Media Group stations in 10 markets went dark to Dish Network customers Wednesday, after a restraining order meant to keep the properties available throughout negotiations was dissolved.

This is the second retrans dispute Cox Media parent Apollo Global Management has had with Dish this year. In January, Apollo pulled stations in 10 markets it had recently purchased from Northwest Broadcasting. That blackout lasted about two months after a truce was reached in March to allow Dish customers access to news and information at the beginning of the COVID-19 pandemic. As of press time those stations were still available to Dish customers. 

This latest dispute involves about 14 stations in 10 different markets, including cities like Jacksonville and Orlando, Florida; Tulsa, Oklahoma; Atlanta; Boston and Seattle. 

According to a Dish press release, the satellite TV service provider took Apollo to court to determine if the private equity firm prematurely terminated its carriage agreement with Dish when it acquired the Cox Media stations in 2019. In January, the Cook County (Illinois) Circuit Court issued a temporary restraining order that kept the stations available to Dish customers. The case was later moved to federal court, and on July 20 the restraining order was dissolved. 

Dish said it asked Apollo to keep the stations live even after the restraining order was removed -- offering to pay increased rates and to true-up any amounts owed Apollo if the stations prevailed in the litigation -- but was rejected.

“We don’t understand why Apollo is choosing to put customers in the middle of its negotiations, especially during a global pandemic when customers need access to local news and programming,” Dish SVP of programming Andy LeCuyer said in a press release. “We have offered to apply our current agreement — with higher rates — to keep their channels available and avoid any service interruption while we continue to negotiate, but they refused, demanding a 40-percent increase to rates agreed to last year. We want to come to a long-term agreement that is fair for our customers.”

In a press release, Cox Media Group called Dish’s lawsuit “misguided,” adding that it had offered a standard extension in order to continue negotiating in good faith, as Dish previously agreed for CMG stations in other markets. “Dish has yet to agree,” CMG said.

“During these times of uncertainty, it is more important than ever that our viewers know their trusted local stations are there for them, providing the news and information they need to make decisions for their families,” said CMG executive vice president of Television Paul Curran in a press release. “CMG stations are often the top-rated providers of important local and national news, and take pride in being resources for our communities, and we will fight to continue to fulfill this responsibility.”

The affected stations are:

· WSB-TV, Channel 2 (ABC, Atlanta, Ga.)

· WFXT-TV, Channel 25 (Fox, Boston, Ma)

· WSOC-TV, Channel 9 (ABC, Charlotte, N.C.)

· WAXN-TV, Channel 64 (IND, Charlotte, N.C.)

· WHIO-TV, Channel 7 (CBS, Dayton, Ohio)

· WFOX-TV, Channel 30 (Fox, Jacksonville, Fla.)

· WFOX2-TV, Channel 32 (MNT, Jacksonville, Fla.)

· WHBQ-TV, Channel 13 (Fox, Memphis, Tenn.)

· WFTV-TV, Channel 9 (ABC, Orlando, Fla.)

· WRDQ-TV, Channel 27 (IND, Orlando, Fla.)

· WPXI-TV, Channel 11 (NBC, Pittsburg, Pa.)

· KIRO-TV, Channel 7 (CBS, Seattle, Wash.)

· KOKI-TV, Channel 23 (Fox, Tulsa, Okla.)

· KMYT-TV, Channel 41 (MNT, Tulsa, Okla.)

Dish subscribers have been blacked out from watching Apollo-controlled Cox Media Group stations in 10 markets in a retransmission-consent dispute.

The stations had been enjoined from interfering with Dish’s ability to retransmit the signals under an agreement reached before Apollo Global Management acquired majority control of the group last year, according to Dish. The case moved from state court in Illinois to Federal Court, which dissolved the restraining order Wednesday.

"We don't understand why Apollo is choosing to put customers in the middle of its negotiations, especially during a global pandemic when customers need access to local news and programming," said Andy LeCuyer, Dish senior VP of programming. "We have offered to apply our current agreement — with higher rates — to keep their channels available and avoid any service interruption while we continue to negotiate, but they refused, demanding a 40% increase to rates agreed to last year. We want to come to a long-term agreement that is fair for our customers."

Dish said it asked Apollo for consent to allow the stations to remain on the air after dissolution of the temporary restraining order, but Apollo rejected the request. Dish said it was willing to pay increased rates for the stations going forward, and to true-up any amounts found owing if Apollo ultimately prevails in the parties' litigation.

CMG blamed Dish for the stations going dark, pointing to the Federal Court ruling, which says, in part, that the broadcaster “cannot prevent Dish from retransmitting the stations. They go dark only if Dish chooses. The court also said that Dish can avoid a blackout by negotiating with CMG.

The broadcaster called Dish had engaged in a “misguided effort to avoid agreeing to a fair market carriage agreement.” It added that it has offered Dish a standard extension in order to negotiate.

“During these times of uncertainty, it is more important than ever that our viewers know their trusted local stations are there for them, providing the news and information they need to make decisions for their families,” said Paul Curran, executive VP of television at CMG. “CMG stations are often the top-rated providers of important local and national news, and take pride in being resources for our communities, and we will fight to continue to fulfill this responsibility.”

Cox Media also accused Dish of resorting its "typical inflammatory and manipulative PR campaigns and legal maneuvers. It noted that Dish has dropped more than 50 channels in carriage disputes.

"Dish also continues to unfairly target Apollo Global Management regarding the negotiations related only to CMG, the broadcaster said. "We regret that Dish, as always, is trying to divert attention from the issue at hand – ensuring our valued viewers are able to watch their favorite local programming." 

The stations involved in the blackout are WSB-TV, Atlanta; WFXT-TV, Boston; WSOC-TV, Charlotte; WAXN-TV, Charlotte; WHIO-TV, Dayton; WFOX-TV, Jacksonville, WFOX2-TV, Jacksonville; WHBQ-TV Memphis; WFTV, Orlando; WRDQ-TV, Orlando; WPXI-TV, Pittsburg; KIRO-TV, Seattle, KOKI-TV, Tulsa and KMYT-TV, Tulsa.

Cox Media Group said it has named former AT&T chief content officer Dan York as CEO of the station group, effective immediately.

York left AT&T on March 1 after nearly a decade at DirecTV. He had been DirecTV’s chief programming executive since 2012, and continued in that role when AT&T purchased the company in 2015. York had been a key figure in AT&T’s programming negotiations and has a long history in the television distribution business, beginning in 1987 as a VP and general manager at HBO/Time Warner Sports.

Cox Media Group took its current shape in February 2019 after private equity fund Apollo Global Management purchased 14 TV properties from Cox Enterprises’ Cox Media Group for an estimated $3 billion. Since then the company, which retained the Cox Media name, has done several deals, bulking up to 33 TV stations in 20 markets, 54 radio stations in 10 markets and several multi-platform streaming video and digital properties.

The company has been involved in a handful of high-profile retransmission consent disputes over the past few months, included a four-day blackout of Verizon Fios TV customers at the beginning of the year. In March it reached a truce with Dish Network customers to resume carriage of several stations during the COVID-19 pandemic that were blacked out in mid-January. 

York joins Cox Media just a few weeks after former CEO Kim Guthrie stepped down after 22 years with the company. 

“I’m excited to welcome Dan as the President and CEO of Cox Media Group,” said Apollo co-lead partner of private equity David Sambur in a press release. “He has an outstanding record of leadership in this industry, and of operating efficiently, creating strategic vision, and inspiring organizations to innovate and grow.”

Steve Pruett, who serves as Cox Media Group executive chairman will remain in that role. 

“The past few months have underscored that there is no substitute for the most important and valuable content in the ecosystem, market-leading local news and entertainment,” York said in a press release. “I look forward to working with the Board and the CMG team as we continue to enhance our partnerships with our advertisers, content providers and distribution outlets to best serve our communities and millions of viewers and listeners.”

York was AT&T’s point man in programming negotiations and helped start The Audience Network, the DirecTV original content vehicle that was expected to be transitioned into a marketing vehicle for AT&T’s HBO Max streaming service.

Prior to being named York had been president of content and advertising sales at AT&T from 2004 to 2012 when he moved to DirecTV. Prior to that stint, he was senior VP of programming and development at InDemand from 2000 to 2004.

Television stations in 10 markets owned by Apollo Global Asset Management went dark to Dish Network customers at 7 p.m. ET Saturday, after the parties could not reach a retransmission consent agreement.

The stations had warned Dish customers that they may lose access to their programming if a deal was not reached. Dish had said Apollo was asking for double the rate it previously received for the properties.

“Apollo doesn’t care how high a customer’s bill gets. It's trying to squeeze every last penny out of consumers to recoup the billions it spent buying these stations,” said Dish senior VP of programming Andy LeCuyer in a press release. “They are fund managers built to serve wealthy private investors, not local viewers. For Apollo it’s about a number. For Dish it’s about customers.”

The stations were formerly owned by Northwest Broadcasting and previously went dark to DirecTV customers last year for about eight months. 

On its station websites, the Apollo stations expressed disappointment, and urged Dish customers to drop the satellite company.

“Despite prolonged negotiations, it appears that Dish is unwilling to carry KLAX beginning at 6:00 PM [CST], January 18th, 2020,” Apollo station KLAX-TV said on its website. “As a result, KLAX will no longer be seen on Dish as of January 18, 2020. Our programming will remain available for viewers over the air, and this dispute will not affect customers of any other video provider. Call Dish today to let them know how you feel. ...Let Dish know that you do have other options, like DirecTV and Suddenlink.”

The stations involved in the blackout are: KLAX-TV (ABC, Alexandria, La.); WICZ-TV, (FOX, Binghamton, N.Y.); WBPN (MNT, Binghamton, N.Y.); KIEM-TV (NBC, Eureka, Calif.); KVIQ-TV (CBS, Eureka, Calif.); WABG-TV (ABC, Greenwood-Greenville, Miss.); :WABGD-TV, (FOX, Greenwood-Greenville, Miss.); WNBD-TV, (NBC, Greenwood-Greenville, Miss.); WXVT-TV (CBS, Greenwood-Greenville, Miss.); KPVI-TV (NBC, Idaho Falls-Pocatello, Idaho); KMVU-TV (FOX, Medford-Klamath Falls, Ore.); KFBI-TV (MNT, Medford-Klamath Falls, Ore.); KAYU-TV (FOX, Spokane, Wash.); WSYT-TV (FOX, Syracuse, N.Y.); WNYS-TV (MNT, Syracuse, N.Y.); KCYU-TV (FOX, Yakima-Pasco-Richland-Kennewick, Wash.); KSWT-TV (CBS, Yuma AZ - El Centro, Calif.); KYMA-TV (NBC, Yuma AZ - El Centro, Calif.)

Dish said it has avoided a larger blackout of Apollo stations after receiving a temporary restraining order in Circuit Court of Cook County, Illinois, to prevent Apollo from blacking out 14 local Cox Media channels. Apollo purchased the Cox Media stations in February. 

Dish said it is offering free antennas to capture the broadcast signal to qualified customers in the affected markets. Customers also have the option to completely drop local channels from their programming package and save $12 on their monthly bill.

Dish will install an antenna for qualifying customers in affected markets based on the expected reception available at their home. Local station availability over the air is dependent on geographic location and topography. Consequently, some customer locations may not qualify for an antenna installation.

Dish Network is gearing up for a possible blackout of 18 television stations owned by Apollo Global Asset Management in seven states, offering the broadcaster an extension to its existing deal, with pay, through Feb. 2 to ensure its customers don’t lose access to the NFL Playoffs and the Super Bowl.

The Apollo stations are: KLAX-TV (ABC, Alexandria, La.); WICZ-TV, (FOX, Binghamton, N.Y.); WBPN (MNT, Binghamton, N.Y.); KIEM-TV (NBC, Eureka, Calif.); KVIQ-TV (CBS, Eureka, Calif.); WABG-TV (ABC, Greenwood-Greenville, Miss.); :WABGD-TV, (FOX, Greenwood-Greenville, Miss.); WNBD-TV, (NBC, Greenwood-Greenville, Miss.); WXVT-TV (CBS, Greenwood-Greenville, Miss.); KPVI-TV (NBC, Idaho Falls-Pocatello, Idaho); KMVU-TV (FOX, Medford-Klamath Falls, Ore.); KFBI-TV (MNT, Medford-Klamath Falls, Ore.); KAYU-TV (FOX, Spokane, Wash.); WSYT-TV (FOX, Syracuse, N.Y.); WNYS-TV (MNT, Syracuse, N.Y.); KCYU-TV (FOX, Yakima-Pasco-Richland-Kennewick, Wash.); KSWT-TV (CBS, Yuma AZ - El Centro, Calif.); KYMA-TV (NBC, Yuma AZ - El Centro, Calif.)

“Apollo Global Management, the new owner of the former Northwest Broadcasting stations, has recently been warning its viewers that they may lose their local channels on Dish,” Dish said in a statement. “Apollo, which is in contract renewal talks with Dish, has been demanding nearly double its current rate to carry its stations. Dish is doing everything in its power to strike a fair deal on behalf of customers.”

On its station websites, the Apollo stations are warning Dish customers that if a deal isn’t reached by 7 p.m. on Jan. 18, they may lose access to programming.

“Our existing agreement with Dish expires at 7:00 p.m. EST on January 18, 2020,” said station WICZ on its website. “If no deal is reached before that date, you will lose live access to the shows, sports and local news on WICZ-TV, which you rely on and are paying for. We are continuing to negotiate with Dish, but Dish has refused to agree to reasonable terms for the valuable programming we provide.” 

Dish also said it was granted a temporary restraining order on Wednesday (Jan. 15) to prevent Apollo from blocking out 14 stations it purchased from Cox Media last year. Dish said that Apollo has been warning Cox viewers that they may lose access to those stations, despite Dish and Cox having renewed a multi-year contract in March 2019.

The Cox Media stations are: WSB-TV (ABC, Atlanta); WFXT-TV (FOX, Boston); WAXN-TV (IND, Charlotte, N.C.); WSOC-TV (ABC, Charlotte, N.C.); WHIO-TV (CBS, Dayton, Ohio); WFOX-TV (FOX, Jacksonville, Fla.); WFOX2-TV (MNT, Jacksonville, Fla.); WHBQ-TV(FOX, Memphis); WFTV-TV (ABC, Orlando, Fla.); WRDQ-TV (IND, Orlando, Fla.); WPXI-TV(NBC, Pittsburgh); KIRO-TV (CBS, Seattle); KMYT-TV (MNT, Tulsa); KOKI-TV (FOX, Tulsa).

Apollo’s Charlotte, N.C. ABC affiliate WSOC-TV said on its website that carriage of the channel by Dish had been temporarily extended and that the company remains in negotiations.

“We are simply seeking a fair deal, which adequately values the award-winning news, sports, entertainment, weather and traffic programming that is paramount to our local viewers,” WSOC-TV VP and general manager Cedric Thomas said in a statement on its website. “In fact, we are asking for far less than what Dish pays for national networks even though our ratings are much higher. More importantly, those national networks offer no local news, provide no information about local school closings, have no local employees, and offer nowhere near the same high-quality, compelling programming that we provide.”

Verizon Communications said it has reached a retransmission consent agreement with Cox Media, ending a four-day blackout of its stations in four separate markets.

The stations -- WFXT (Fox) in Boston, WXPI (NBC) in Pittsburgh and WSYT (Fox) in Syracuse -- went dark to Verizon customers in those areas on Dec. 31. s In a statement sent to Multichannel News at 7:37 p.m. Saturday, Verizon spokesman David Weissmann said a deal had been reached.

“We’ve been able to reach an agreement with the owners of WXPI, WFXT, and WSYT and will be able to restore their programming to our Fios® TV customers shortly,” Weissmann said in the message. “We appreciate the patience of our customers and value their business.”

Cox Media’s WSYT station website -- purchased as part of a larger deal by Apollo Global Management in February -- confirmed that a deal has been reached. 

“Verizon Customers: We’re back on! Thank you for your patience,” WSYT’s website stated. 

Tegna shares fell as much as 7% Wednesday after it was revealed that it received a buyout offer from private equity giant Apollo Global Management in February, an advance it rebuffed but which could put the broadcast station group in play.

Tegna said Wednesday in a brief statement that Apollo had approached the company in late February about buying it, but without offering a specific price. In June the private equity giant proposed combining Tegna with Cox broadcast assets it was in the process of buying at the time in a “transaction that would not have constituted a change of control of Tegna,” the broadcaster said in a statement. Tegna said it would have no further comment on the disclosure.

The disclosure confirmed an Aug. 16 Wall Street Journal story that said Apollo had approached the broadcaster. 

Apollo was unavailable for comment.

Tegna shares were down about 7% to $14.49 each in early trading Wednesday, but improved slightly to close at $14.77 each (down 4.9%).

The Cox deal added 14 stations to Apollo’s portfolio, and the private equity giant was said to be close to a deal to acquire Northwest Broadcasting, a Michigan-based owner of about 20 TV stations in the Pacific Northwest. While Apollo was expected to be a bidder for the 21 TV stations that Nexstar Media Group divested as part of its Tribune Media purchase, those properties were sold in two separate deals to E.W. Scripps and Tegna.Tegna, with about 51 TV stations covering 35% of the country’s TV homes would make Apollo an instant player in the national broadcast market. 

In a research note, Wolf Research managing director Marci Ryvicker estimated that there is a 55% probability that Tegna is sold at a price of about $21 per share (a 35% premium to its Aug. 20 closing price), leaving a 45% chance that “something else happens.”

While the news came as investment banker Standard General divulged that it has raised its stake in Tegna to 9.2% (making it Tegna’s largest individual shareholder) Ryvicker believes the broadcaster is an attractive take-out target for Apollo because it has no controlling shareholder or dual class of stock and its stations fit well with the former Cox stations. But, she added, Apollo better hurry.

“By waiting, Apollo runs the risk of potentially transacting a deal under a Democrat-led FCC, which could try to eliminate the UHF discount,” Ryvicker wrote. “Tegna continues to buy anything and everything it can to stave off M&A (our view) [and] 3) Wall Street has fallen out of love with broadcast (today) due to concerns re: retrans, core advertising & recession.”

As Cable Networks and distributors continue to struggle with the shift toward streaming video, private-equity giant Apollo Global Management, once a big player in the cable space, is turning an eye toward broadcast-TV stations and the lure of retransmission-consent revenue.

Apollo is not-so-quietly involved in three high-profile broadcast deals. On Friday (Feb. 15), it agreed to purchase a majority interest in 14 stations owned by Cox Media; it is said to have an agreement to buy Northwest Broadcasting, a Michigan-based broadcaster with more than a dozen stations in the Pacific Northwest; and it is said to be a bidder for stations Nexstar Media Group has earmarked for divestiture in connection with its $6.4 billion purchase of Tribune Media. Nexstar has identified about 15 market overlaps with Tribune properties, but there is no guarantee all of the affected stations will be put up for sale.

Apollo did not disclose the price it paid for the Cox assets, which include newspaper and radio properties in Ohio, but a prior report from Reuters said the deal was worth around $3 billion. Cox will retain a minority interest.

Becoming a Player Quickly

All in all, Apollo could become a player in the station group arena relatively speedily. The Cox deal would boost Apollo’s station holdings to about 40 across the country, putting it in the same neighborhood as Tegna, which owns 49 stations in 41 markets, and Tribune, which owns 42.

Apollo’s interest comes as TV station properties are drawing interest from nearly every sector. Once thought to be media’s version of the buggy whip, TV stations, with their emphasis on live sports and news programming, are becoming the last bastion of ad-supported content. In a climate where viewers are increasingly glued to ad-free subscription video-on-demand services, live sports and news continue to be appointment television.

Case in point: 21st Century Fox, which is nearing the finish line in the sale of its linear cable and production assets to The Walt Disney Co. for $71.3 billion. After that deal closes, expected in the first half of this year, Fox will be left with cable news, sports and broadcast properties. It has said on several occasions it would like to beef up its station portfolio over time.

Private-equity firms Blackstone Group and Providence Equity also are believed to be interested in adding to their broadcast portfolios.

An obvious attraction is the potential of more lucrative retransmission-consent revenue.

Nexstar has said it expects retrans intake from the Tribune stations alone to rise by $72 million in their first year under its ownership, applying the Nexstar rate card. With more stations in large markets, Nexstar should be able to grow its overall retrans haul substantially this year, when a big chunk of its stations come up for renewal.

But there is a risk. Even as station groups look to get bigger — with Gray TV completing a $3.6 billion deal to buy Raycom Media in January and others expected to seek deals to increase scale — retrans growth is slowing. According to Kagan, a unit of S&P Global Market Intelligence, retrans revenue is expected to rise to $10.8 billion in 2019, up 6% from $10.2 billion in 2018, and increase another 4%, to $11.2 billion by 2020.

“We do see a slowing trend in terms of the growth rate from a high double digit growth rate on a year-over-year basis to a high single digits on a year-over-year basis,” Kagan senior research analyst, broadcast media Justin Nielson said.

Retrans May Have Hit Wall

Adding to that risk is that retrans contracts are usually on a three-year cycle, about the same window for a typical private-equity firm to seek a return on its investment. There’s also the idea retrans fees have hit a wall, as distributors and customers push back after years of double-digit increases.

Retrans fees currently average from $2.50 to $3 per subscriber per month, Nielson said. Some analysts have estimated that for the Big Four — CBS, NBC, ABC and Fox — those rates could rise to $4 to $5 per subscriber per month.

“From a broadcaster perspective, they still think there is still room to move up,” Nielsen said. But from a pay TV provider’s point of view, he cautioned, “You only have so much leeway on what you can pass along to consumers.”

There is expected to be a robust market to sell stations, another key component of private equity participation. Aside from Fox, which has expressed a desire to increase its station holdings after its Disney deal closes, Tegna and Gray Television are also expected to be on the hunt for more properties, Nielson said.

Private equity firm Apollo Global Management has agreed to purchase a majority interest in 14 television stations owned by Cox Media Group, as well as a controlling stake in newspaper and radio assets Cox owns in Ohio.

Terms of the deal were not disclosed. But news that the deal was on the radar was first reported earlier in the week by Reuters, which slapped a $3 billion price tag on the transaction. 

Cox Enterprises, Cox Media’s parent, will maintain a minority stake and will create a new company with Apollo to operate the stations, headquartered in Atlanta.

Related: Report: Apollo Nears Purchase of Cox Stations 

According to Cox, the stations involved in the deal represent its entire TV station portfolio: three ABC affiliates -- WSB-TV in Atlanta; WFTV-TV in Orlando, Fla.; and WSOC-TV in Charlotte, N.C.; an NBC affiliate (WPXI-TV) in Pittsburgh; two independent stations -- WRDQ-TV in Orlando and WAXN-TV in Charlotte; three CBS stations -- WHIO-TV in Dayton, Ohio; KIRO-TV in Seattle and WJAX-TV in Jacksonville, Fla.; four Fox affiliates -- WHBQ-TV in Memphis; WFOX-TV in Jacksonville, Fla.; WFXT-TV in Boston; and KOKI-TV in Tulsa, Okla. Rounding out the list is MyNetworkTV affiliate KMYT-TV in Tulsa.

Apollo Funds also will purchase a majority stake in Cox Media’s other platforms in Ohio: newspapers the Dayton Daily News, Springfield News-Sun and the Journal News; and radio stations WZLR, 95.3 FM and 101.1 FM; WHKO, 99.1 FM; and WHIO, 95.7 FM and 1290 AM.

Cox first put the stations on the block in July. In a press release, Cox Enterprises CEO Alex Taylor said he was pleased a buyer was found that shared Cox’s vision and commitment to continue investing in the business.

“These stations have decades of experience breaking barriers and delivering the news and information their communities need daily,” Taylor said. “We wanted to find a company that is committed to investing in broadcast television now and in the future, and we found that in Apollo.”

Barclays PLC, Moelis & Company LLC and BDT & Company, LLC served as the financial advisors and Eversheds Sutherland LLP and Covington & Burling LLP served as the legal advisors to Cox Enterprises in this transaction.

RBC Capital Markets LLC, Guggenheim Partners LLC, and LionTree Advisors, LLC served as the financial advisors and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Greenberg Traurig, LLP served as the legal advisors to the Apollo Funds in this transaction.

“We are extremely excited for our funds to acquire a majority interest in Cox Media Group’s broadcast television stations and are humbled by Cox Enterprises’ decision to entrust us to steward these stations and carry on the Cox legacy. We have an extraordinary amount of respect and admiration for the journalistic integrity, news quality, and commitment to community across Cox Media Group’s broadcast stations,” Apollo senior partner David Sambur said in the release. “We look forward, in collaboration with Cox Enterprises, to supporting the high standards to which each station operates and contributing to the platform’s future growth and prosperity.”

Cox Media Group is nearing the finish line in the months-long process of selling 14 television stations across the country, with private equity giant Apollo Global Management said to be close to a deal to purchase the properties for about $3 billion.

News that Apollo was close to a deal was first reported by Reuters. A deal was expected to be announced as soon as this week. 

In a statement Tuesday, Cox Media said it is still evaluating its options with the stations.

“This process is ongoing, and we are not disclosing any information on the process or interested parties at this time,” Cox Media said in a statement. “We will make an official announcement once a decision has been made.”

Cox put the stations on the auction block in July. The stations include ABC, NBC, Telemundo, CBS and Fox affiliates in nine states and reach more than 31 million viewers in markets like Atlanta; Boston; Seattle; Pittsburgh, Pa.; Tulsa, Okla.; Dayton, Ohio; Orlando, Tampa and Jacksonville, Fla.; Memphis, Tenn.; and Charlotte, N.C.

Apollo has been an aggressive investor in TV stations. It agreed to purchase Northwest Broadcasting, which owns about 12 stations in the Pacific Northwest, last year and is one of the bidders to purchase certain TV stations to be divested as part of Nexstar Media’s $6.4 billion purchase of Tribune Media. 

Outerwall, the parent company of DVD-rental kiosk operator Redbox and Coinstar money services, has inked a $1.6 billion deal to be acquired by private-equity firm Apollo Global Management.

The deal, which comes about four months after Outerwall retained two firms to help it explore strategic alternatives, calls for Apollo Funds to acquire all outstanding shares of Outerwall’s common stock for $52 per share in cash. The Outerwall board has blessed the deal.

That offer is about 51% above Outerwalls’ closing stock price on March 14. Outerwall shares were up $5.35 (11.4%), to $52.26 each, in late morning trading Monday.

The offer also arrives soon after Redbox confirmed it is testing a digital VOD/electronic sell-through offering called “Redbox Digital” that aims to complement the unit’s core kiosk rental business.

Outerwall CEO Erik E. Prusch said in a statement that “Apollo is an ideal partner to support Outerwall's efforts to continue serving our millions of loyal customers and dedicated retail partners through our unrivaled network of kiosks and automated retail offerings.  We look forward to working closely with Apollo as we continue to strengthen our businesses and execute on our strategic plan."

They expect to close the deal in Q3 2016. Outerwall will then become a private company.

Outerwall’s Redbox unit pulled in approximately 137.7 million rentals in the first quarter of 2016, down from approximately 173.0 million rentals in the first quarter of 2015.

Outerwall will release Q2 earnings after market close on Thursday, July 28, and does not intend to hold a conference call to discuss them. The Outerwall board also declared a quarterly dividend of 60 cents per share of common stock.

Morgan Stanley & Co. served as financial advisor to Outerwall, and Wachtell,Lipton, Rosen & Katz and Perkins Coie LLP are serving as legal counsel. LionTree Advisors, Bank of America Merrill Lynch, Barclays, Credit Suisse and Jefferies LLC are acting as M&A advisors to Apollo, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Apollo.

Financing is being provided by Bank of America Merrill Lynch, Jefferies Finance LLC, Barclays and Credit Suisse.