Tribune buys Local TV LLC for $2.7 billion




Tribune adds stations from Cleveland, Milwaukee, and Memphis to its stable

About a year or so ago, there was speculation on whether or not Tribune Broadcasting, planning to exit Chapter 11, would stay in the broadcast business.

Consider this a definite answer.

Chicago-based Tribune announced Monday it was acquiring Newport, Ky.-based Local TV LLC for $2.7 billion. The deal gives the company true duopolies in Denver and St. Louis, and access to markets such as Cleveland, Milwaukee, Salt Lake City, and Oklahoma City for the first time. With this acquisition, Tribune would own the most Fox stations (14) outside of the O&Os. Excluding Ion, this deal makes Tribune the largest group owner in the country in terms of coverage.

The deal also gives Tribune a presence in every major Midwest market (excluding Detroit, Minneapolis, Columbus and Cincinnati), and increasing presence in the South, owning stations in Alabama, North Carolina, Virginia, Oklahoma, and Tennessee.

Tribune also gains another station in Illinois with the acquisition of Local’s WQAD in Moline, serving the Davenport (IA)-Rock Island area.

Local TV was formed in 2006 with the purchase of the former New York Times Co. Television station group by private equity firm Oak Hill Capital. In late 2007, Local purchased eight Fox-owned stations, including WITI/Milwaukee, WJW/Cleveland, KTVI/St. Louis, and KSTU/Salt Lake City. In 2009, Local swapped WBRC/Birmingham to Raycom for WTVR in Richmond, Va.

Local and Tribune already shared back-room services through a shared services agreement via a third-party management company forged together by Randy Michaels, who helped formed Local and left to become CEO of Tribune in December 2007. In 2008, Local TV and Tribune combined operations and created “virtual duopolies” in St. Louis and Denver, where Local and Tribune each owned a station.

Tribune noted synergies in the deal would result in saving of more than $100 million within the next five years, and would grow ad revenue.

The Tribune-Local deal is part of a wave of mergers and acquisitions sweeping the media industry. Just two weeks ago, Gannett agreed to purchase Belo for $2.2 billion, while Sinclair and Nexstar are gobbling up stations in smaller markets.

And broadcasters are not the only ones pairing up: MSO TimeWarner Cable is on the hunt for acquisitions with Cox and Charter on its wish list – before it ends up being acquired itself in a hostile takeover by John Malone, who through Liberty Media, owns 27 percent of Charter Communications. Other smaller cable MSOs (such as WOW) could also become targets.

And then there’s satellite MSOs DirecTV and Dish, who are also looking at targets – and possibly each other (hello, Sirius-XM….)

The merger craze comes as both broadcasters and cable/satellite providers are looking to increase their clout – broadcasters are seeking more retransmission revenue from MSOs and looking to increase leverage with content providers (i.e. syndicators), while the MSOs are looking to keep costs in check. Despite a decline in total viewership, local TV station values have skyrocketed – thanks in part to continued strong local news ratings and the large influx of political advertising dollars.

The deal is subject to FCC approval and is expected to close by the end of the year.

Interesting fact: With the purchase of Local TV’s WGNT in Norfolk, Tribune (which started as WGN Continental Broadcasting) now owns every station that has some variation of WGN in its call letters. The others are KWGN in Denver (acquired in 1966); WGNO in New Orleans (acquired in 1983); and of course, WGN-TV and WGN-AM Chicago. WGN stands for “World’s Greatest Newspaper”.

The CBS affiliate in Atlanta now known as WGCL-TV was former independent WGNX-TV, owned by Tribune from 1984 to 1999. When Meredith Corp. purchased WGNX, it immediately changed the call letters to WGCL.

WGNT was originally known as WYAH-TV; when it was sold to Centennial Broadcasting in 1989, the call letters changed to WGNT, but known as “We’re Greater Norfolk Television”. WGNT was later sold to Viacom, which spun off all its local broadcast channels to CBS Corporation in 2006. Local TV bought WGNT in 2010.

Here is the new look Tribune station group, once the deal is done:

1,WPIX,New York,CW
2,KTLA,Los Angeles,CW
8,WDCW,Washington D.C.,CW
22,KRCW,Portland OR, CW
28,KSWB,San Diego,Fox
30,WTIC,Hartford-New Haven,Fox
30,WCCT,Hartford-New Haven,CW
31,WDAF,Kansas City,Fox
33,KSTU,Salt Lake City,Fox
39,WXMI,Grand Rapids-Kalamazoo-Battle Creek,Fox
41,KFOR,Oklahoma City,NBC
41,KAUT,Oklahoma City, Ind.
46,WGHP,Greensboro-Winston Salem-High Point,Fox
51,WGNO,New Orleans,ABC
51,WNOL,New Orleans,CW
54,WNEP,Wilkes-Barre-Scranton PA,ABC
57,WTVR,Richmond VA,CBS
72,WHO,Des Moines,NBC
79,WHNT,Huntsville AL,CBS
99,WQAD,Davenport-Moline-Rock Island,ABC
101,KFSM,Ft.Smith AR,CBS
101,KNXW,Ft.Smith AR,MyNetTV[/table]