Nexstar to acquire Tribune Media for $4.1bn


Financier Worldwide Magazine

February 2019 Issue

Nexstar Media Group has agreed to buy Tribune Media Company for $4.1bn. The deal will see Nexstar acquire all outstanding shares of Tribune for $46.50 per share in an all-cash transaction. Nexstar will also assume $2.5bn of Tribune Media’s outstanding debt.

The deal represents a 15.5 percent premium on Tribune’s closing price on 30 November 2018, the last day of trading before the transaction was announced. The boards of both companies have approved the deal, which is expected to close in the third quarter of 2019, subject to regulatory approvals and the satisfaction of other customary closing conditions. Nexstar is believed to have outbid private equity firm Apollo Global Management in order to secure the deal.

Once completed, the merger will see Nexstar become the largest operator of local TV stations in the US, surpassing Sinclair Broadcast Group, which itself abandoned a merger attempt with Tribune in 2018 following regulatory concerns. US Federal Communications Commission (FCC) chairman Ajit Pai objected to the Sinclair deal, fearing that a Sinclair-Tribune merger would make Sinclair an entertainment monopoly. The collapse of the Sinclair-Tribune deal, which would have seen Sinclair pay $43.50 per share for Tribune, attracted comment from US president Donald Trump, who noted that the FCC’s opposition to the transaction was “so sad and unfair”. The Nexstar deal, by comparison, is not expected to attract the same regulatory opposition.

Nexstar already owns, operates and provides sales and other services to 174 television stations reaching nearly 39 percent of all US television households. Tribune owns or operates more than 40 stations, as well as the national network WGN America.

“We are delighted to have reached this agreement with Nexstar as it provides Tribune shareholders with substantial value and a well-defined path to closing,” said Peter Kern, chief executive of Tribune Media. “Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets. We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers. The premium value our shareholders are receiving reflects the hard work of our dedicated Tribune employees in maximising the value of our portfolio. I look forward to working closely with the Nexstar team to deliver on the value of this compelling combination and to ensure a smooth transition and integration of our companies.”

“Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies,” said Perry Sook, chairman, president and chief executive of Nexstar. “We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today’s rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate. As with our past transactions, we have developed a comprehensive regulatory compliance plan and believe we have a clear path to closing. With committed financing and a plan for significant synergy realisation that will result in only a minimal increase in Nexstar’s pro-forma leverage, the combined entity will be poised for growth, leverage reduction and increased capital returns for shareholders.”

“This accretive transaction marks further progress toward our goal of improving our competitive position by strategically expanding our operating base to realise the benefits of scale, increasing our strategic and financial flexibility, and driving shareholder value,” added Thomas Carter, chief financial officer of Nexstar. “Our long-term experience in integrating acquired assets and our success over the last seven quarters in outperforming our synergy targets and driving other operating efficiencies related to our acquisition of the Media General operations will serve us well as we add the Tribune Media assets to our operating base. With our experienced management team, operating discipline and focused approach to managing our capital structure and cost of capital, we believe the acquisition of Tribune Media presents another meaningful opportunity for Nexstar, the markets we serve and our shareholders.”

Consolidation in the broadcasting industry has become more common as broadcast companies continue to reorganise to combat the growing viewership of streaming services like Netflix and Amazon Prime.

© Financier Worldwide


Richard Summerfield

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