The enduringly popular CBS procedural series Blue Bloods is known for its family drama. Tom Selleck stars as New York City Police Commissioner Frank Reagan, who also heads the Sunday dinner table every episode. Frank often delivers clear-eyed wisdom in the face of long odds. “Doing the right thing may be hard,” he once said, “but it sure as hell isn’t complicated.”

That may be how Brandon Burgess felt when he offered up one of the most successful and prescient ideas in modern media. After moving to head up Paxson Communications in 2005 from his spot running business development and global strategy for NBCUniversal, Burgess looked through the numbers. With over 70 stations, the knee-jerk option for the company — renamed ION Media Networks — was to spend big and build a roster of originals programmed for a younger demo. But ION’s hobbling debt and a fervent study of ratings suggested a different plan: license off-network hits, particularly crime dramas, for a song and aim them at an underserved TV market: older adults, especially women.

The strategy was crazy, counter­intuitive, vastly unpopular and brilliant. In time, ION found a home for popular procedural fare (including Blue Bloods) and turned a red ledger black with a smooth efficiency that matched the company’s chairman/CEO.

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“A lot of people would have blown their brains out trying to program originals, but Brandon didn’t fall for it,” said Jeff Sagansky, former Paxson CEO and cofounder of media ventures company Flying Eagle Acquisition Corp. “He licensed the biggest shows when there was no other audience for them. It was really a visionary move.”

Added Guggenheim Partners executive chairman Alan Schwartz: “In media and in business, there are some people who are really good at seeing the big picture, and others who really drill down and work on all the details. Brandon’s one of the few I’ve come across in my career that did both.”

None of this was accidental for Burgess. He grew up in Germany “with a healthy work ethic” and, after coming to the U.S., graduating from Wharton and doing stints at PepsiCo and Goldman Sachs, he set his sights on New York and a job at NBC. “Over time, we all have to figure out what we’re good at,” Burgess said. “I wasn’t going to direct episodes of Friends. The question is looking for the angles where you can apply yourself in the environment you want to succeed, and for me, that’s always been analyzing things, and if need be, playing the long ball.”

Toward that end, he understood early the eventual reach of digital and, at NBC, worked to create nbcolympics.com; he was also part of the purchase of Telemundo and instrumental in NBC’s first entertainment network acquisition, Bravo, and of buying Universal Entertainment. 

“Universal was the big cherry on top,” he said now of the deal that led to NBCUniversal. “The industry was consolidating around us. [NBC was] left with a 90% advertising business and declining ratings; it was the early 2000s and all the shows were expiring, and the content creators had all the leverage. We needed to diversify … and needed, basically, a transforming deal.”

Playing ‘Moneyball’ in TV

The same need explains the much more organic licensing move Burgess implemented in fall 2008, after coming to ION in late 2005. Burgess, a fan of the book Moneyball, about the Oakland A’s statistics-based strategic rise to success starting in 2002, used a similar tactic to explain the move to his people, who were dumbfounded. “Boy, did we have boardroom arguments,” he said.

Burgess has never shied away from such challenges, and his enviable record of reading trends and producing results speaks for itself. Favoring national over-the-air networks in 2007 sparked ION’s multi-network portfolio, and the U.S. multicast category. And he’s long been a leader on topics such as broadcast spectrum and wireless. 

With ION’s $2.7 billion sale to E.W. Scripps in 2021, Burgess has pivoted away from the boardroom to enjoy family and leisure time — for now. “It’s hard not to be intrigued by all the technologies that are coming out,” he said, looking down the road. “I think there are organizing principles out there that would require a whole new learning curve.”

Perhaps, but one expects he’d join a company, crunch the numbers and, true to form, make visionary moves, leaving other execs shocked, even dismayed. One gets the sense that, for Brandon Burgess, it sure as hell isn’t complicated. ■

Two new urban-targeted streaming services spearheaded by veteran cable industry executive Douglas Holloway have launched on Roku TV.

The free ad-supported streaming services – UKW Media, a family entertainment-themed service, and Urbn-TV, which offers feature films, documentaries, series webisodes and podcasts – seek to shape a new narrative about people of color, according to networks founder Holloway, the former distribution executive at ION Media Networks and NBCUniversal. Both of the streaming services feature content produced by filmmakers of color and also include content from historical libraries, he added.

“We understand the power of images in the media. We want kids to grow up seeing people who look like them on the screen,” Holloway said. “We intend to present a robust line-up of primarily independent multicultural programming that evokes a lifestyle of wellness and productive outcomes.”

UKW Media co-founder and COO Judy Kim added: "UKW Media and Urbn-TV gives creators of color a platform to tell their stories in an authentic and compelling manner.” ■

John Chachas started his own boutique investment bank — Methuselah Advisors — with Lazard colleague Louis Zachary in 2010, soon after falling short in a bid to unseat then-U.S. Senate Majority Leader Harry Reid in his home state of Nevada. (He placed fourth in the Republican primary, losing to Sharron Angle, who was later defeated by Democratic incumbent Reid.) For the longtime financial executive, with decades of experience as an investment banker with Lazard, Merrill Lynch and First Boston, it was a blessing in disguise. Methuselah carved out a niche in broadcast deals, most recently advising E.W. Scripps in its $2.65 billion purchase of Ion Media. The boutique bank was instrumental in bringing Warren Buffett’s Berkshire Hathaway in as an equity participant. In part to ensure regulatory approval of that deal, Chachas bought 23 Ion stations, creating Inyo, which reaches about 16% of U.S. TV households. He spoke with Multichannel News about the television industry and his plans for the broadcaster. An edited transcript follows. 

How did Methuselah come about? About 11 years ago, I had done something nuts and ran in the Republican primary for the U.S. Senate. When I lost in that primary back in my home state of Nevada, rather than returning to a larger firm, I decided I wanted to do something that was a little more entrepreneurial. Today, Methuselah is a small place, but we punch above our weight. I have a great team in place. My partner Louis Zachary and I have been together for 35 years, starting back to First Boston in the early 1980s. Whether it’s selling Rolling Stone or the New York Daily News, which we did, or working on bigger deals like Ion, now we are putting our own money to work in things like Inyo.

How did you get Berkshire involved in the Scripps deal? Some years ago, I got to know one of the key people at Berkshire Hathaway, a really terrific guy named Ted Wechsler [Berkshire’s investment manager], and I talk to Ted actively about deals. Having known Scripps for 40 years and knowing Ted like I did, I felt the two of them would get along pretty well from their history, roots and value systems. Frankly the credit goes to [Scripps CEO] Adam Symson and Ted. I had a good hunch and the hunch worked out, but it was really their work that turned it into a deal. 

ALSO READ: Burgess Ponders What He’ll Do After Selling Ion Media

Why did you think it’s a good time to get into broadcast? I think there is a reckoning on the horizon, which is going to be very positive for over-the-air television and for people that have good creative content. Big tech in this country has financially benefited disproportionately from the content created by others. I think there's a big comeuppance that is about to happen and personally I think, notwithstanding how great it is to have all these choices for streaming, the American consumer wants good content and wants it preferably free. We made a tactical bet that the over-the-air station ecosystem was going to be healthy and grow. 

Scripps has said it will not seek retransmission-consent fees for the Ion stations it bought. Will Inyo do the same? We will do the same. I think the retrans fee marketplace is suitable for certain kinds of local over-the-air broadcast assets. In this instance we’re best served by preserving our channel position and making sure that we’re carried, that the multicast channels that all these stations have are carried. I think we are better off focusing on the continuation of that model than we are trying to extract money out of the MVPDs that feel already burdened. 

How do you compete with other larger network-affiliated broadcasters? Is there a big enough niche? People don’t realize Ion makes a lot of money. It is a very successful, genre-specific entertainment asset. The management team did a great job building awareness of Ion as a destination for specific kinds of content. Our relationship is that as long as Ion is successful, we’ll be successful. We’ll just continue to ride in that wake for now. Might we do something else in other broadcast areas in the future? I don’t  know. Maybe, if we see attractive things to add, but in the near term we intend to be a supportive partner of that asset. 

The E.W. Scripps Co. said it will start moving its Katz digital multicast networks on March 1 to the TV stations it acquired when it bought Ion Media.

Also Read: Scripps Goes National By Buying Ion for $2.65 Billion

Scripps also announced that it is cutting 120 jobs across its corporate and national networks units. The company said it expects to realize $500 million in cost savings over the next six years by combining Ion’s operations with its own.

The Ion Television Network will continue to be broadcast on the primary channel of Scripps’ 48 Ion station, but the company said it will shut down Ion Plus, Qubo and Shop Ion, which had been airing on multicast channels, effective Feb. 28.

Also Read: Burgess Ponders What He’ll Do After Selling Ion Media

One of the reasons Scripps bought Ion Media for $2.65 billion in September was so it could stop paying stations to broadcast the Katz Network, which are Bounce, Court TV, Court TV Mystery, Grit and Laff.

Also Read: No Retrans, No Problem for Scripps’ Ion Deal

“The distribution expansion of the Scripps multicast networks through ION’s broadcast spectrum is the first major step in our realizing the tremendous synergies of the ION transaction,” said Scripps CEO Adam Symson. “National Networks president Lisa Knutson and her team are working quickly and effectively to uphold Scripps’ commitment to executing our plan. Once again, Scripps is doing what we said we would do.” 

Scripps closed its purchase of Ion earlier this month.

The E.W. Scripps Co., building its national networks business, said it named three executives--Brad Samuels, Damian Riordan and Yvonne Haugh--to new distribution posts.

Also Read: Scripps Goes National By Buying Ion for $2.65 Billion

The executives come from Katz Networks, Ion and Newsy, the three businesses that comprise Scripps’ national networks unit. They will all report to Jeffrey Wolf, the Katz exec recently appointed chief distribution officer for the national networks businesses.

Haugh was appointed VP, distribution and affiliate relations, overseeing all operations relatied to distribution and affilaite relations including contract management and operations. She was most recently senior VP, marketing and affiliate relations and chief of staff for Katz Networks. Earlier, she spent 23 years at Turner Broadcasting.

Samuels was named VP, distribution partnerships and strategy and will lead efforts to distribute the networks across pay TV, OTT connected TV and other platforms. Samuels, a 30 year TV distribution veteran, was most recently VP, distribution for Newsy.

Riordan was named VP, broadcast distribution and will develop and maintain partnerships with broadcast partners. He had been senior VP, broadcast relations for Ion Media, which Scripps is in the process of acquiring.

“The opportunity ahead for the new Scripps networks is incredible, and I’m proud to partner with this deeply experienced team on setting and executing distribution strategies that will help our programming engage viewers in every corner of the U.S.,” said Wolf. “Our partnerships with broadcasters, streaming services and other distributors is key to our success, and the broad range of experiences that Yvonne, Damian and Brad bring to the table will help Scripps shape the next era of television.”

The new posts become effective when Scripps’ acquisition of Ion closes.

The E.W. Scripps Co. named Jonathan Katz chief operating officer and head of entertainment for its new national television networks business.

Katz, who is head of Scripps' Katz Networks unit, will have additional oversight of revenue, research, marketing and programming for the entire portfolio of Scripps’ national networks. 

Also Read: Scripps Goes National By Buying Ion for $2.65 Billion

Scripps’ national networks business consists of the Katz Networks--Bounce, Laff, Grit, Court TV--Newsy and the soon-to-be acquired Ion Media.

Also Read: Burgess Ponders What He’ll Do After Selling Ion Media

Katz will report to Lisa Knutson, who was previously named to lead Scripps' National Neworks. He founded Katz Networks, which was acquired by Scripps in 2017.

“With his many years of experience in launching, growing and expanding some of the country’s most-watched networks and leading best-in-class teams to fuel growth and innovation, Jonathan has proven time and time again his ability to anticipate and super-serve consumers’ diverse and evolving interests,” said Knutson. “Jonathan is a tremendous asset to Scripps as we bring our national networks businesses together to capture the momentum of over-the-air audience growth and multiplatform TV viewing.”

Before starting Katz Networks, Katz was senior VP and general manager of program planning and acquisitions for Turner Entertainment Networks. Before that he was VP of marketing for CNN Newsource. He began his career with local stations in Tampa, Charlotte, Birmingham and Tuscaloosa.

It’s mission accomplished for Brandon Burgess, the CEO of Ion Media. Starting in 2006, Burgess took Paxson Communications, changed the company’s name to Ion Media, built up viewership and last month agreed to sell it to E.W. Scripps Co. for $2.65 billion. 

Burgess, 52, won’t be sticking around to help run Scripps’s newly enlarged national media unit and collect an earn-out. 

“My role in the company in the deal, if it happens, is very, very clear, at least in my mind,” Burgess said in an interview. “I’m not going to be a part of it. I’m very supportive of everything, but I’ve been doing this a long time. This is a good outcome for everyone and I’m going to work my butt off to make it all happen. And then, I need to go off and fi nd some new things.” 

It’s not unlike 15 years ago, Burgess said, when he was with NBC as it completed its acquisition of Universal and its cable channels. “I was on the 52nd floor saying, ‘Well, what do I want to do with my life?’ I said what I really want is to be a bigger fish in a smaller pond and have a lot more skin in the game.” 

Betting on Broadcasting 

Scanning the landscape at the time, before retransmission grew and cord-cutting emerged, he noticed that television was getting too expensive and decided to invest in free over-the-air broadcasting and turn it into a respectable value delivery platform. 

“I remember saying to [then-NBC chairman and CEO] Bob Wright that this thing’s going to surprise us one day,” Burgess said. 

NBC bought a 32% stake in Paxson and, amid a series of lawsuits, got an option on owner Bud Paxson’s shares. Paxson left and Burgess became CEO. 

Ion’s balance sheet needed to be restructured, which was accomplished in a private-equity deal with Citadel LLC in 2007. Its costs had to be right-sized and new programming deals had to be struck. Eventually, Ion grew into the fifth-most watched TV network in terms of primetime audience, per Nielsen. 

Come 2020, Burgess’s investors had been in Ion for a long time and were ready to get out, rather than put more money in. When the pandemic hit, it looked like they’d have to wait a bit longer before cashing out. 

“There were not a not a lot of people that had the stomach and the appetite to do this right in the middle of a lockdown,” he said. 

Burgess said he’d had a conversation with Scripps president and CEO Adam Symson at the 2019 NAB Show and the two companies’ strategies lined up perfectly. “The strength and quality of the Ion network is a testament to Brandon’s creativity and innovative approach to television,” Symson said. “While the rest of the broadcast industry looked only at the local marketplace, Brandon built a business of significant value by understanding early the importance of scale and going national.” 

When Scripps said it was ready to do a deal, COVID or no COVID, Scripps secured the financing and brought in Warren Buffett’s Berkshire Hathaway, which invested $600 million in Scripps preferred shares. 

“We on our own had an appetite to get bigger, by buying or by selling ourselves into something bigger, whichever came first,” Burgess said. “This company was built for this type of transaction. It was built as an enabling platform for when people see the value of broadcast.” 

Streaming may be the bright, shiny object at this moment. But, Burgess noted, while having 1 million live viewers watching Blue Bloods may not be sexy, most streaming services are losing money while Ion enjoys a 60% profit margin.

And that’s without the retransmission consent revenue that sustains most broadcast companies. Ion chooses to get cable carriage via must-carry — which earns no fee. Burgess said that in order to get retrans, Ion would have had to acquire sports programming and big network-affiliated stations in order to have leverage in negotiations. Ion’s investors didn’t want to write that big a check. For now, Scripps said it will also follow that strategy. 

Scripps plans to use the Ion stations’ signals to carry its digital networks, which will mean a big reduction in distribution costs. Scripps-owned Katz Networks pays stations to broadcast Bounce, Laff, Grit and Court TV on secondary digital channels. 

“That’s a layup,” Burgess said, adding that Scripps is getting even more than it bargained for. “I hope Scripps will appreciate all this synergy I’m leaving on the table. They’re getting this thing perfectly set up.” 

For one thing, Ion doesn’t have original content, but it does have full ad-supported streaming rights to the content it licenses from ViacomCBS and others. 

And rolling up Scripps networks with Ion will create a package even more attractive to advertisers, Burgess believes. “We’ve positioned ourselves as a broadcast entity, but we’re offering ourselves to cable advertisers and they like that, because they’re getting broadcast eyeballs, which are much more expensive, and at cable prices,” he said. “That’s how we’ve grown our share every year and Scripps is going to find they can do the same thing supersized with multiple networks.” He compared Scripps’s collection of channels to a mini-Viacom. 

There will also be programming synergies as Ion and Jonathan Katz of Scripps’s Katz Networks go to market together, he said. “Collective purchasing across multiple networks is the name of the game these days. That’s also one of the reasons why we, as a standalone company, wanted to operate more networks,” Burgess said. “The fact that Scripps is stepping into that is a no-brainer from my perspective.” 

Once the Scripps deal closes, Burgess is planning to take a break. “I’ve been so deep into operations for so long. Now I kind of need to take a breather and look around and reassess a bit again,” he said. “I don’t have a business plan in my pocket.” 

But he notes that this TV market is being completely reshuffled by COVID, by technology and by the capital markets. “I think values are going to be all over the place. We’re going to take a breath and see where the interesting bets are, on not just operational disruption but financial disruption. People have been riding a successful wave for a long time using conventional corporate finance metrics on debt and leverage. I think a lot of people are going to get re-shuffled and revalued.” 

Instead of riding a wave, Burgess is looking forward to hitting the slopes. He started skiing as a child growing up. He likes extreme skiing, off helicopters and in back countries. Surprisingly, he doesn’t own a ski house. “You’re actually better off not owning a house in one place,” he said. His go-to location is Deer Valley in Park City, Utah, but after going there for a long time, it turned out that every other year, there was no snow. “So you just have to follow the snow around at this point,” he said. 

“I have a long list of hobbies that I’ve under-invested in for a long time,” he added. “I have young kids and I have some real estate projects that I have to finish.” 

And while he says he wants some time away from the grind of business, you never know when something will drag you back in.

“When I talk to friends of mine who get a divorce — and we all know divorce rates are 50/50, so every second one of your friends is getting a divorce, just mathematically — and when you say to them, what are you going to do? They say ‘Oh nothing. I'm just going to enjoy life.’ And then sure enough three months later, they have a girlfriend,” he said.

“I never fully understood that. That’s not where my head is at the moment. But it’s possible, right? You might go on a date and say, ‘Wow, you know, I really like this dating thing.’ But I only mean metaphorically speaking, obviously.” 

Taking a Break, for Now 

So unless there’s a project he falls in love with, Burgess said he wants to take a beat. “I want to take a moment and figure out what I am really good at and what I really like to do. Those things are not always the same thing, by the way. And I need to sort that out: What am I good at and do what I’m good at.” 

But he already sounds a bit itchy to make any hiatus a brief one. “I am not going to deny that I’m intrigued with being a little bit more of an investor mindset as opposed to the day-to-day grinding it out on the operating side, to be honest with you,” he said. “But at the end of the day, it depends a bit on what’s the situation you’re looking at and What does it need? Those are exactly the right questions.”

One rarely hears about a station group deciding not to pursue lucrative retransmission consent fees but when E.W. Scripps agreed to acquire Ion Media for $2.65 billion, it said the Ion stations would stick to must-carry.

Analysts initially said they were surprised by the unusual strategy and asked about it during a conference call in which Scripps executives went over details of the transaction.

“Just so I’m 100% clear, there’s no affiliate fees or retrans today from Ion and your plan is that going forward, you’re not necessarily looking for a subscription supported carriage model on the content,” asked Steven Cahall of Wells Fargo. “Is that right?”

“That’s correct,” answered Scripps CEO Adam Symson. “The fees that Ion receives are immaterial and no, we will continue to elect must-carry because Ion’s model, as does [Scripps’ Katz Networks units] depends on the broadest distribution possible in the pay TV ecosystem.”

Cable operators might be able to breathe a rare sigh of relief. Usually the first thing that happens after stations are acquired, the new owner looks to use the leverage of a larger company to force distributors to pay higher fees.

But not Scripps. Not this time.

“This is a unique situation,” said Justin Nielson, senior analyst at Kagan, the media research unit of S&P Global Market Intelligence. “I think it is really because Ion has been unsuccessful in doing its own retrans deals.”

Nielsen said that three years ago Ion tested the market to see if it could get retrans fees, but was rebuffed. Ion’s failure to push harder for retrans scuttled a possible joint venture with 21st Century Fox. Ion affiliates have also been unable to push cable operators to pay retrans fees, Nielsen said.

While foregoing fees, opting for must-carry assures stations that their programming streams will be distributed by cable operators and satellite services. Avoiding a tough negotiation avoids disrupting Ion’s advertising business. 

Scripps, which had $382.7 million in retransmission revenues in 2019, up 27% from 2018, is no stranger to retransmission battles. Scripps stations were blacked out for five weeks starting in July in a dispute with Dish Network. Dish claimed Scripps was seeking a 250% increase in retrans fees. Scripps denied seeking a hike that size.

In the case of Ion, distributors might have a good reason for not wanting to pay fees, because they don’t have local programming or local news, Nielson noted.

Under Scripps, they could, especially in areas where Scripps already has news operations. “Instead of saying that’s something they may explore down the line, they state we’re going to keep the status quo--must carry--for distribution," he said.

Angling for retrans also might not sit well with Wall Street. Scripps is pitching its Ion deal as a free-over-the air play, and analysts have been downgrading programmers as the number of pay TV subs erode.

Scripps is pitching the Ion acquisition to Wall Street  in part as a bet on an over-the-air TV comeback.

“Over the air may not be sexy, at least not yet,” Symson said. “But Ion and Katz are proof that there is a lot of value being created there. Scripps bought Katz Networks--which runs Bounce, Court TV, Court TV Mystery, Laff and Grit--in 2017 for $292 million.

Symson said that it has been tracking a “renaissance” in over-the-air viewing. “While most people are only focused on the variety of internet streaming options for TV, they’re missing the reality that over-the-air television has been growing right alongside the digital over-the-top platforms.”

Although it owns TV stations that broadcast its programming, Ion is a lot like a cable network. Just 20% of its viewing comes from over-the-air, which is why must-carry is important.

“It looks like a cable network and it reaches the nation's cable and satellite TV households like a cable network, but at its core it's an over-the-air broadcast business that reaches cord cutters and cord-nevers on the growing free over-the-air television platform,” Symson said. Ion “outperforms The CW and many cable networks you probably thought were bigger," he added.

One way Ion is like a cable network is its profit margin, which is 50%. “It's an efficient business built on the back of its national reach,” Symson said.

The Katz Networks are similar, being broadcast on TV stations’ secondary digital channels but increasingly getting carriage on cable and dependent on national advertising for revenue.

The Katz Networks will be a big beneficiary of the Ion deal because Ion stations will broadcast the Katz Networks in their markets, instead of Katz paying stations to carry its signals. Those payments are one of Katz’s biggest expenses. Eliminating those costs are a big part of distribution synergies Scripps said will be worth $120 million a year in six years, when all the existing agreements lapse.

Scripps is pinning its hopes on the national advertising market. Despite the drop in the economy caused by the pandemic, Katz’s revenue have been up 14% during the first six months of the year. The company said it expects Ion’s revenues to grow in the low double digit range.

“There is no string of search words, no display advertising, nor any targeted Facebook ads that can command the attention nor evoke an emotion like television advertising,” Symson said.

Scripps said it has no plans to begin investing in expensive original programming for Ion. “I wouldn't forecast any near-term changes in the programming strategy because it's been very very effective,” Symson said, endorsing the strategy of buying successful off-network shows instead of trying to create its own hits.

Symson didn’t say what roles Ion CEO Brandon Burgess would have in Scripps’ new national television group, including Ion, Katz and Newsy.

“Over the next couple of months we’ll kick off a project working with Ion's leadership team, the leadership team at Katz and in the leadership team at Newsy to create an integration plan so that we can really build a new Scripps Networks business, inclusive leadership and culture from across all of the different businesses,” he said.

Scripps will be selling off 23 of the Ion TV stations to a buyer who will keep them as Ion affiliates. It recently sold off its Stitcher podcast business and WPIX-TV, New York.

But it has no plans to sell its spectrum--now combined with Ion, the biggest collection of spectrum in the industry.

“We would be monetizing it as an operator. Not as a seller,” Symson said of the spectrum. “Being the largest holder of broadcast spectrum in the country puts us in a very good position to play a leadership role as the industry develops new ways to reach the American consumer, with data with programming, through our existing multicast and new programming strategies.”

Scripps stock jumped from Wednesday’s close of $10.47 to $13.90 after the deal was announced Thursday. It lost some steam and closed Thursday at $11.27. On Friday, Scripps share edged up to $11.62. 

“First impressions on E.W. Scripps’ deal for Ion Media is that it is a transformational acquisition combining the local station and network assets into a nationwide TV platform with a reach of over 100 million homes,” said Kagan’s Nielson in a note. “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 Buffet’s Berkshire Hathaway.”

Local broadcaster E.W. Scripps Co. is jumping into the national television business by buying Ion Media for $2.65 billion in a deal backed by Warren Buffett’s Berkshire Hathaway.

Berkshire Hathaway is investing $600 million in Scripps to help pay for Ion and make a bet on free over-the-air television.

Scripps already had a national presence with Katz Networks, which runs channels like Bounce and Court TV. Ion reaches 96% of U.S. homes with stations in 62 markets and 124 affiliated stations. At this point its signals are carried on cable via must carry and it doesn’t benefit from lucrative retransmission consent fees.

“This evolution of Scripps’ national television networks business, through the combination of Ion, the Katz networks and Newsy, repositions the company in the television landscape,” said Scripps president and CEO Adam Symson.

“With its strong revenue growth, high margins and significant cash flow, Ion will make Scripps a more powerful and durable media business with significant near-term benefit as well as long-term value. Ion Media is a distribution double threat – carried on cable and satellite through must carry while also capitalizing on cord-cutting and the growth of free over-the-air broadcasting,” Symson said. "This transaction is another in a long list of Scripps’ transformative moves to where we see opportunity for growth and to benefit from the evolving media landscape."

The acquisition makes Scripps the largest holder of broadcast spectrum at a time the industry is transitioning to ATSC 3.0, which could create new business models. 

Scripps will divest 23 Ion stations to bring the company into compliance with FCC regulations. Scripps has agreed to a transaction with a buyer, which has agreed to maintain Ion affiliations for the stations. Those stations will also carry the Katz networks in markets where they are available.

"As the media industry continues its rapid evolution, Berkshire Hathaway is fortunate to partner with this management team and the Scripps family, who have successfully anticipated the future of media for over a century,” said Ted Weschler, the Berkshire Hathaway officer responsible for the investment.

Scripps said the acquisition will produce $500 million in synergies, most of which will be realized by applying Scripps’ contractual arrangements over the next six years.

The company also expects national ad revenue to grow in the low double-digit range in 2021.

Analyst Steven Cahall of Wells Fargo called the announcement the deal of the year. 

“While we've historically liked Scripps management and assets, investors have found the portfolio too in between: not enough National (relative to the portfolio) to be a growthy stock thesis, and not enough Local scale to get the cash profile of its peers,” Cahall said. 

“The Ion deal is undoubtedly transformative as it nearly doubles Scripps enterprise value and the mix of stations + a national net ties everything together like a media bow,” he said. “Bringing Berkshire Hathaway in is also about the best equity market seal of approval there is. We expect investor interest in Scripps to accelerate on the back of this deal and should push Scripps' strong operating performance and proactive strategy into the limelight.”