Thursday, June 13, 2013

KHOU, WFAA, KENS & KVUE and other Belo stations go to Gannett

All I have to say is wow. I wake up to Gannett (owners of USA Today and other media properties) taking over Belo. Never saw this coming.

 I have to admit, it makes me sad. I liked the fact that Belo was a strong Texas-based television group. It had a nice Texas footprint owning stations in Dallas, Houston, San Antonio and Austin (and around the country too).

As I watch the media trades daily, lately I've seen more of these mergers happening. Looks like that will just be the way it is. Never thought it would hit this close to home though.

All we can hope is that Gannett takes care of the stations, won't have layoffs and keeps the high quality product Belo has been known for through the years. In Texas, Below owns KHOU Houston, WFAA Dallas, KENS San Antonio and KVUE Austin.

Here is the official release from Belo:

Gannett To Acquire Belo, Accelerating Ongoing Transformation Into Diversified Higher-Margin Multi-Media Company
Acquisition Nearly Doubles Gannett's Broadcast Portfolio, Creating Fourth-Largest Owner of Major Network Affiliates with 21 Stations in Top 25 Markets
Transaction Immediately Accretive to Non-GAAP Earnings per Share

Gannett to Repurchase $300 Million in Shares Over Next Two Years; Reaffirms Dividend Program
McLEAN, Va. and DALLAS, June 13, 2013 /PRNewswire/ -- Gannett Co., Inc. (NYSE: GCI) and Belo Corp. (NYSE: BLC) jointly announced today that they have entered into a definitive merger agreement under which Gannett will acquire all outstanding shares of Belo for $13.75 per share in cash, or approximately $1.5 billion, plus the assumption of $715 million in existing debt for an enterprise value of approximately $2.2 billion. The transaction, which has been unanimously approved by the boards of directors of both companies, represents a 28.1 percent premium to the closing price of Belo common stock on June 12, 2013.

The combination creates a broadcast "Super Group," catapulting Gannett into the nation's fourth-largest owner of major network affiliates reaching nearly a third of all U.S. households. The acquisition nearly doubles Gannett's current broadcast portfolio from 23 to 43 stations, including stations to be serviced by Gannett through shared services or similar sharing arrangements. Upon completion of the transaction, Gannett's Broadcast segment will have greater geographic and revenue diversity, with 21 stations in the top 25 markets and will become the #1 CBS affiliate group, the #4 ABC affiliate group, and will expand its already #1 NBC affiliate group position. Following the transaction, Gannett's Broadcast segment is expected to contribute more than half of the Company's pro forma total EBITDA, and the Digital and Broadcast segments combined are expected to contribute nearly two-thirds.

The Company anticipates that the transaction will generate approximately $175 million in annual run-rate synergies within three years after closing. The transaction is expected to generate significant free cash flow and be accretive to non-GAAP earnings per share by approximately $0.50 within the first 12 months. The transaction valuation implies a 9.4x average 2011/2012 EBITDA multiple prior to synergies, and a 5.4x multiple assuming expected synergies.

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. It will significantly improve our cash flow and financial strength, enabling us to quickly pay down debt while remaining committed to disciplined capital allocation. By enhancing our portfolio with one of the largest, most geographically diverse and network-balanced TV station groups in the country, the new Gannett will be well positioned to lead innovation, bolster our existing growth initiatives and take advantage of new opportunities in the emerging digital media landscape."

Commenting on the transaction, Dunia A. Shive, Belo's President and Chief Executive Officer, said, "This is an outstanding and financially compelling transaction for our shareholders. It is also a testament to the tremendous value our employees have created over Belo's long history and to the strength of our brand in the media industry. I am confident that we have found an excellent partner in Gannett – they are a leading media company that shares our commitment to the highest levels of journalistic integrity and embraces an active approach to community involvement. Together, this portfolio of media assets will be well-positioned to capitalize on substantial growth opportunities in the years ahead."

Additional Transaction Details

The transaction is expected to close by the end of 2013, subject to antitrust approval, Federal Communications Commission (FCC) approval, approval by holders of two-thirds of the voting power of Belo shares, and customary closing conditions. Belo's directors and executive officers, who collectively own approximately 42 percent of the voting power of Belo's outstanding shares, have entered into voting and support agreements to vote their shares in favor of the transaction with Gannett. Gannett expects to finance the purchase through cash on hand, accessing the capital markets and bank financing.

Capital Allocation Update

Gannett will continue its share buyback program and has replaced its existing remaining authorization with a new $300 million authorization expected to be used over the next two years. The Company will also continue its existing dividend payment program. Given Gannett's balance sheet strength and increased cash flows from Belo's broadcast stations, the Company expects to promptly pay down the debt associated with this transaction and maintain significant financial flexibility going forward.

J.P. Morgan Securities LLC is providing financial advice and Nixon Peabody and Paul Hastings are serving as legal advisors to Gannett on the transaction. RBC Capital Markets, LLC is providing financial advice and Wachtell Lipton Rosen & Katz is acting as legal advisor to Belo.

- Gannett Memo Tells Employees What to Expect with Belo Buy


  1. I totally agree with your post. It was surprising to hear this morning as I was watching WFAA that they were being acquired by Gannett. I hope this will not change their current operations as many of our Texas Belo stations have been recognized for their quality of reporting. I am curious to see who will get sold since there will now be a duopoly in St. Louis.

  2. Evidently it came as a shock to Belo employees too, guess not everyone was told.

  3. Hoping any transition is "seemless".
    Best wishes and Congratulations!

    dc goode

  4. Here's a taste of the new graphics and music that's coming to all Belo-turned-Gannett stations.

  5. this Gannett/Belo deal ($2.2B) is the biggest acquisition since News Corporation acquire Chris-Craft Industries for $5.3 Billion

  6. Hopefully they'll fire the bleached blonde weather girl

  7. I live in one of the cities that is going to hit hard with the Gannett-Belo merger, Phoenix. Belo already owns a duopoly here (Independent and CW) and Gannett owns AZ Republic and the NBC station. It's going to ruin the local news here in the Phx area. I just can't imagine Belo stations like WFAA, KHOU and KING being forced to change with the Gannett mandate graphics and music. I hope this sell doesn't ruin the Belo station's news operations as all the Texas stations and the other belo stations have great news coverage. It's an end of an area for tv especially in Texas.

  8. I would rather see Gannett spinning off KMSB/KTTU, KMOV, and WHAS to Meredith, and KTVK to Scrips and combined the operations with KNXV with ABC moving to KTVK and KNXV becomes independent while KPNX is combined with KSAW. LIN could buy WSET and WCIV from Allbritton and KSTU, KDVR and turned into a CW station with KWGN getting FOX, WDAF, KTVI and turned into a ABC station with KPLR getting FOX and KDNL getting CW, WITI with the option of also acquiring WIWN from Pappas if they would want to fully sale the station in the future, WJW, WHNT, WGHP and turned into a ABC station with WXLV getting FOX, and maybe WNEP from Local TV LLC, while Meredith could buy KWGN and KPLR if Tribune would ever sale various stations to help pay off it's debt from their 2008 bankruptcy and buy KFOR/KAUT, KFSM/KXNW, WHO, WQAD, WREG, WTVR, and WTKR/WGNT from Local TV LLC. I would allow FOX to buy KPLR and KWGN from Tribune if I still want Meredith to buy KMSB/KTTU, KMOV, and WHAS from Belo.

  9. A very sad day for broadcasting and Journalism. Belo was a class act. One of the most highly regarded Broadcast groups. They did good old fashioned American JOURNALISM.

    Granted even they have moved over to more Hollywood Tonight themes. Gannett is the owner of USA TODAY a rag from the start. Gannett loves to use Magid associates for consulting. Every station they own looks and sounds the same.

    The days of local Tv News are really limited.


  11. Does this mean the end of Great Day Houston?

    1. I've heard Duncan's show makes lots of money so i doubt it

  12. Disney Would by WFAA and Become 2nd ABC O&O in The Texas, After KTRK-TV In Houston, TX.

    1. No, Disney doesn't want to buy ANY MORE STATIONS! Truth be told they want to get out the business of owning O&O stations. That's no true. Disney, makes lots of money for their O&Os but nope, nope, nope, nope! Not true Daniel.


Note: Only a member of this blog may post a comment.