Gannett Nearly Doubles TV Portfolio with $2B Deal for Belo

Gannett Co., which owns KTHV-TV, Channel 11, in Little Rock and the Baxter Bulletin in Mountain Home, announced Thursday that it's buying Belo Corp. of Dallas in a $2.2 billion deal that includes $175 million of debt.

Gannett's purchase of 20 Belo stations in markets including Dallas, St. Louis, Phoenix, New Orleans and Seattle will bring its total station portfolio to 43, creating the fourth-largest owner of major network affiliates with 21 stations in top 25 markets.

In all, Gannett says it will become the No. 1 CBS affiliate group, the No. 4 ABC group and expand its current position as the No. 1 NBC group.

From the news release:

Gracia Martore, President and Chief Executive Officer of Gannett, said, “We are thrilled to bring together two highly respected media companies with rich histories of award-winning journalism, operational excellence and strong brand leadership.  We have been successfully transforming Gannett into a diversified multi-media company with broadcast, digital and publishing components across high-growth markets nationwide, and this is another important step in the process. 

(Note that the deal doesn't include Belo's newspaper properties, which includes the Dallas Morning News. Belo spun off its newspaper division into a separate company, A.H. Belo, in 2008.)

Obviously, the deal removes Belo Corp. from the list of possible buyers of Allbritton Communications Corp.'s portfolio of stations, which includes Little Rock ABC affiliate KATV-TV, Channel 7

Allbritton announced earlier this year its intention to sell all its TV stations to focus on Politico, the fast-growing political news website it founded in 2007. The company told Arkansas Business last month that it hopes to sell its stations in one batch by the end of the summer.

The Gannett-Belo deal is a good sign for Allbritton -- more evidence that there's still companies looking to expand their local television portfolios. And Gannett's deal for Belo -- with a multiple at 9.4 times the average 2011-12 EBITDA multiple -- is good news for station valuations throughout the country. 

"The deal appears to be really good news for TV station valuations and would seem to indicate that the rough economic times may be easing," Doug Krile, executive director of the Arkansas Broadcasters Association, said an email to me this morning. "Especially if buyers are willing to pay a substantial premium over the going stock price for properties." 

Who's Left to Buy?

Meanwhile, now that Belo's sold out, who's left that could snatch up Allbritton's portfolio of ABC affiliates? 

Barring the possibility that ABC might want to snap up the Allbritton stations to build out its "owned and operated" portfolio, the most likely candidate is probably Sinclair Broadcast Group Inc. of Hunt Valley, Md., the country's largest TV station owner.

Sinclair's been on a tear lately, quickly adding to its stable of mid-sized market properties. It's announced three deals this year, and when they're complete, it will have doubled in size to operate 134 stations in 69 markets.

And in case you're wondering about Nexstar Broadcasting Corp. of Irving, Texas, which has itself been on an acquisitive streak -- well, you can probably count it out of the running. Along with its shared services partner Mission Broadcasting, Nexstar has already maxed out its presence in Little Rock, controlling two stations: NBC affiliate KARK-TV, Channel 4, and Fox affiliate KLRT-TV, Channel 16.

More: Gannett's memo to employees about what to expect in the Belo buy.

(* Arkansas Business and THV 11 have a news-sharing agreement.)

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