Tribune agreed Monday to buy 19 television stations for about $2.7 billion, making it one of the nation’s biggest owners of commercial local-TV outlets amid a groundswell of consolidation in the industry.
The stations are in 16 regions, including Denver, Cleveland and St. Louis, and many of their local news broadcasts are ranked first or second in their markets. They will complement Tribune’s 23 existing stations and its WGN America cable channel. Tribune owns KCPQ and KZJO-TV in the Seattle market.
Tribune is buying the stations from Local TV Holdings, a company owned by the investment firm Oak Hill Capital Partners.
The deal comes less than a month after Gannett agreed to buy Belo for about $1.5 billion, nearly doubling its local television holdings. In that transaction, expected to close by the end of the year, Gannett will pick up 20 television stations owned by Belo, including KING 5 in Seattle.
Most Read Business Stories
- 6 Dr. Seuss books won't be published for racist images
- Frontier cancels flight, citing maskless passengers
- Biden vows enough vaccine for all US adults by end of May
- Amazon sued by Black cloud-computing manager over alleged racial discrimination and sexual harassment
- Texas becomes biggest US state to lift COVID-19 mask mandate
Another of the biggest station owners in the country, Sinclair, has spent about $2 billion acquiring a series of smaller station owners in the last 1½ year, and it has said it is on the lookout for more such opportunities.
But Tribune’s deal eclipses all the others. It comes as Tribune is weighing a potential sale or spinoff of its newspaper properties, including The Chicago Tribune and the Los Angeles Times. Advisers of Tribune have been in touch with potential bidders, ranging from the Koch brothers to the billionaire Eli Broad.
Steve Ridge, the president of the media strategy group at Frank N. Magid Associates, said “2013 will go down as the year of transformational consolidation, forever changing the landscape of local-market television ownership and operation.”
Such consolidation helps media companies gain more scale, giving them additional negotiating clout with programming and distribution partners. It also gives them more exposure to political battleground states, where election candidates spend enormous amounts of money on advertising.
Peter Liguori, the new chief executive of Tribune, contended the combination with Local TV makes his company “the No. 1 local TV affiliate group in America.”
“Scale matters,” he said Monday in a conference call with Wall Street analysts. He said Tribune would look at other TV station purchases or perhaps swapping stations with other ownership groups.
“But right now, job No. 1 is to operate what we have at the highest levels and greatest efficiencies,” Liguori said. “We believe this transaction is a perfect complement to our existing businesses.”
Media watchdogs immediately expressed concern about the possibility of increased consolidation in television, an important source of news for many Americans.
“Wall Street may be overjoyed at this merger mania, but the rest of us should be very worried about having fewer viewpoints on the air and fewer reporters on the beat,” Craig Aaron, chief executive of the Free Press watchdog group, said in a statement issued Monday.
“By the time all these deals are done, a handful of companies could control almost all of the network affiliates in major markets and swing states,” Aaron said.
After falling out of favor with investors five years ago amid a brutal advertising recession, TV stations once again are viewed as valuable properties. The business has strongly rebounded in the last three years, largely because of the return to health of the auto industry and several political campaign cycles that saw big spending on local TV ads.
Seven of Local TV’s 19 stations are affiliates of the Fox network. Tribune already owned seven, and through the acquisition it will become the biggest holder of Fox affiliates.
The company will remain the biggest holder of affiliates of the CW, a small broadcast network jointly owned by CBS and Warner Brothers.
Alan Mutter, a newspaper consultant, said that since Tribune emerged from bankruptcy at the end of the year, the company has accelerated its shift away from newspapers.
Mutter noted that Gannett was following a similar path with its purchase last month of local television stations, and he warned executives at both companies that the profits may not last for long.
“Local broadcasting is going to be the next big legacy media that undergoes what we like to call a painful paradigm shift,” Mutter said. “I actually question why everybody would be rushing into the local TV business. It’s a great business. It’s a highly profitable business. What happened to newspapers is about to happen to TV.”
Tribune plans to finance the deal through cash on hand and up to $4.1 billion in loans from JPMorgan Chase, Bank of America Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse. The transaction is expected to close this year.