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 Meredith shares rose as much as 5.7 percent on Monday, while Gannett
shares were up 3.6 percent to touch their highest level in a year.
Meredith said it expects the three stations — KTVK-TV and KASW-TV in
Phoenix and KMOV-TV in St. Louis — to generate revenue of $105
million-$115 million, and add between 16-18 cents to its run-rate
earnings per share in the first full year after closing.
Dwindling advertising revenue and audience numbers have pushed
broadcasters to acquire more TV stations that have multiple revenue
streams, including cable operators who pay retransmission fees to
carry channels.
Meredith plans to aggressively grow its local TV station group
through acquisitions that could eventually lead to a spin-off,
Meredith's Chief Executive Stephen Lacy told Reuters in an interview
earlier this month.
"These are high-performing stations and will add to our already
strong cash flow," Meredith Chief Executive Stephen Lacy said in a
statement. The acquisitions will add to the company's earnings
immediately.
The deals are a part of Gannett's acquisition of television company
Belo Corp for $1.5 billion in June, which was approved under the
condition that it did not include KMOV-TV.
Gannett agreed to transfer ownership of six Belo stations in Phoenix
and St. Louis to Sander Media last week because Gannett already
owned stations in those markets.
Meredith said it expects to finance the transactions with new bank
and private placement financing and that the deals are expected to
close during the first half of 2014.
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The company added that the license and some assets of KASW-TV would
be bought by SagamoreHill of Phoenix LLC.
Meredith will provide some services for the operation of the
station.
The deal is expected to add about 43 cents per share to Gannett's
adjusted earnings in 2014.
"These sales will significantly lower the effective purchase price
for Belo while reducing only minimally the expected synergies
associated with the Belo transaction," Gannett CEO Gracia Martore
said in a statement separately.
Following the Gannett-Belo deal, Tribune Co said in July it would
buy 19 TV stations from Local TV Holdings LLC for $2.73 billion.
Sinclair Broadcast Group Inc agreed to acquire eight television
stations from the Allbritton family for $985 million.
(Reporting by Abhirup Roy and Neha Alawadhi in Bangalore;
editing by Joyjeet Das)
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