Station mergers and acquisitions seem to have followed the weather this year. After a 2013 that saw $8.8 billion in activity, there was an M&A deep freeze that mirrored the polar vortexian chill gripping much of the country. As the temps inched toward hospitable, Post-Newsweek did a deal involving a Top 20 station and a boldface name. And with spring a day old, Media General revealed a $1.6 billion merger with LIN Media.
While all eyes are on Washington as the FCC picks through the particulars of JSA arrangements, station M&A activity will likely continue to heat up. If you don’t have a dance partner, the thinking is, you better find one before it’s too late. “It seems like everybody is starting to look to pony up with each other now,” said Mark Toney, senior VP at consulting firm SmithGeiger. “There was a time when 35-40 stations gave you lots of strategic control. Now it seems like you may have to have 75.”
The pairing up of a couple of far larger TV outfits is also a factor in station groups’ desire to multiply. “Broadcasters see Comcast and Time Warner Cable [merging], and see how increased scale would really benefit them too,” said Robin Flynn, senior analyst at SNL/Kagan.
Merger Madness
The pending marriage of Media General and LIN had at least one thing in common with other shotgun station pairings, including Gannett-Belo and Media General- Young: They were quietly orchestrated and surprised many who had been in close contact with principals in the deal. The joint group, which would be comprised of 74 stations and be called Media General, will be headed by Vincent Sadusky, the well regarded president and CEO of LIN. Speaking jointly on the day of the deal, he and George Mahoney, Media General president and CEO, forecasted $70 million in synergies within three years of the deal’s closing.
“It’s a healthy thing for our industry to have quality players like ourselves come together and have a more efficient scale in conversations with the very large entertainment networks,” said Sadusky.
The deal, awaiting regulatory approval, is expected to close in early 2015.
Buffett Open for Business
The merged Media General will have to sell stations in five overlapping markets, including Green Bay and Providence. One tantalizing name has thrust itself into the speculation games regarding potential buyers of stations: famed financier Warren Buffett, whose Berkshire Hathaway outfit agreed to acquire WPLG Miami on March 12 in a complicated swap with Graham Holdings of cash, stock and an ABC affiliate in DMA No. 16.
Graham Holdings is the former Washington Post Company, whose name changed following its divestiture of the newspaper to Jeffrey Bezos. The station group retains its Post-Newsweek name.
It is believed to be Buffett’s first venture in TV station ownership, though his connection to WPLG—the call letters stand for Phillip L. Graham, late husband of former Washington Post publisher Katherine Graham— goes back decades, as does his close relationship—personal and professional—with the Graham family.
“He knows WPLG and has a real connection to it,” one former Washington Post Co. insider said of Buffett. “He has a way of finding a good asset, and it’s a great television station.”
Buffett’s dealings with the press are scant, and a Berkshire Hathaway rep did not return a call for comment. Bert Medina, WPLG VP and general manager, was out of the country and unavailable for comment.
Berkshire Hathaway’s holdings are vast, ranging from Brooks running shoes to See’s Candies to NetJets. The so-called Oracle of Omaha has in some ways legitimized slow-grow traditional media; two years ago Berkshire Hathaway purchased all but one Media General newspaper for $142 million.
The WPLG sale fueled rumors that Post-Newsweek is in play, though Emily Barr, president/CEO, insists it is not. Buffett’s motivation in the deal may have been a $400 million tax avoidance, according to website TheStreet, but many wonder if he will pick up more broadcast assets. “Is he interested in that?” said the former Washington Post Co. exec. “You never know.”
The grand foyers and dim bars of the Vegas hotspots will be crawling with broadcast chiefs at the NAB Show next week, many seeking to do deals as the next phase of station consolidation goes down. “I thought the FCC activity would dissuade more acquisitions, but there’s interest in getting bigger,” said Mark Fratrik, senior VP and chief economist at BIA/Kelsey. “I think that bodes well for the local TV industry.”
