Every deal has its winners and losers, and a jury of local TV insiders has weighed in on who came out on top following the recent sale of 22 Newport Television stations for just north of $1 billion. The majority felt it was not the three buyers—Sinclair, Cox and Nexstar—emerging as clear-cut victors, but the seller: Newport president/CEO Sandy DiPasquale and his Providence Equity Partners backers.
“They paid a billion for them, they sold them for a billion, and they have five stations left,” went one insider’s math. “They did OK.”
Unsold, for now, are Newport’s KGET Bakersfield, KGPE Fresno, WHAM Rochester (N.Y.), WXXA Albany (N.Y.) and KMTR Eugene (Ore.). One person with knowledge of DiPasquale’s thinking says the stations will sell soon. DiPasquale did not return calls for comment.
It was another era when Providence bought the former Clear Channel TV station group. The parties agreed on a $1.255 billion price in 2007 before the credit market crashed. The deal was held up in court before it closed in 2008 for $1.1 billion.
Providence pulled off a few minor sales last year, cashing in on KTVF Fairbanks and KVOS Bellingham (Wash.).
Brokers give Providence credit for making its money back on an initial deal done in an overblown market. “I thought they’d have a difficult time, but they were able to get it done despite the disparate breadth of markets,” says Dick Foreman of media brokerage Richard A. Foreman Associates. “Since they bought at the height of the 2007- 2008 period, I think they’ve done pretty damn well.”
Pundits believe the station groups made out well too, starting with Sinclair, which added WOAI San Antonio, where it also owns the Fox and MyNetworkTV stations, and market leader WKRC Cincinnati, among others. The moves fit the trend of Sinclair acquiring strong news stations—and not Fox affiliates. “For me, the No. 1 story is that Sinclair spent the most, got the biggest markets, and in most markets doubled up,” says Larry Patrick, managing partner at brokerage Patrick Communications. (In addition to its $412.5 million Newport pact, Sinclair recently grabbed the Tampa MyNetwork TV station in a separate $40 million deal.)
Nexstar added stations that fit its profile, including some that will slide into its upstate New York hub. Cox picked up duopolies in Jacksonville and Tulsa. Bill Hoffman, executive VP of Cox Media Group, said the acquisition was about moving into bigger markets; Cox subsequently announced it was putting a batch of smaller-market stations, as well as radio outlets, on the block.
Of course, not everyone can come out a winner in the zero-sum M&A game. The media watchdogs might posit that viewers, and laidoff TV professionals, lose out when new owners consolidate local operations. “There will definitely be some journalists who hit the bricks,” says Patrick.
Others are not sold on Providence Equity coming out on top. Even if its remaining stations bring the total price up a few hundred million, one dealmaker says it’s a modest return on a five-year investment. “That looks more like a money market account,” he said. “Private equity is supposed to do a lot better than that.”
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