The combined company, with 142 full-power
television stations in 92 markets, will reach about 24 percent
of total U.S. television households, more than doubling Gray's
reach.
Shares in Gray jumped 16 percent to close at a four-month high
of $14.85.
Gray's largest deal comes at a time when the U.S. Federal
Communications Commission is making it easier for media
companies to buy TV stations in the same market, and for local
stations to jointly sell advertising time.
In November, the FCC voted to remove certain roadblocks to
increased consolidation among media companies, potentially
unleashing new deals among TV, radio and newspaper owners as
they seek to better compete with online media.
"We believe all the broadcasters could eventually become targets
for larger tech or telecom companies over time, especially as
content generation increases," said Daniel Kurnos, an analyst at
Benchmark Co.
Another major broadcaster Sinclair Broadcast Group Inc is
awaiting approval from FCC and U.S. Justice Department for its
$3.9 billion acquisition of Tribune Media Co.
Gray's offer for Raycom, an employee-owned company, will consist
of $2.85 billion in cash, $650 million in a new series of
preferred stock, and 11.5 million shares of Gray common stock,
the companies said.
Wells Fargo has underwritten $2.53 billion in debt financing for
the deal.
The deal will create the third largest portfolio of stations and
markets in the United States, Gray said.
Gray said it will divest television stations in each of the nine
overlapping markets to get antitrust approval for the deal,
which is expected to close in the fourth quarter of 2018.
Raycom plans to sell or spin off Community Newspaper Holdings
Inc, its unit that owns community newspapers, as well as
PureCars, a digital ad platform for the automotive industry.
Gray said it will not acquire neither unit as part of the deal.
Raycom President and Chief Executive Officer Pat LaPlatney will
become Gray's president and co-chief executive officer, along
with Gray CEO Hilton Howell.
(Reporting by Munsif Vengattil in Bengaluru; Editing by Bernard
Orr and Sriraj Kalluvila)
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