$103 million deal gives Nexstar its first stations in Iowa, expands company's holdings in N.Y. and Ill.
Under the terms of the purchase agreements, Nexstar will acquire WOI, the Des Moines, Iowa, ABC affiliate; WHBF, the CBS station in Rock Island, Ill.; and KCAU, Sioux City, Iowa's ABC station, from entities related to Citadel Communications, L.P. for $88 million and will immediately begin operating the three stations pursuant to a Time Brokerage Agreement. The Des Moines station will be acquired pursuant to a stock purchase agreement while the Rock Island and Sioux City station acquisitions are structured as asset purchase agreements.
Mission will acquire two stations in Binghamton, N.Y. (WICZ [FOX] and WBNP-LP [MNT]) from Stainless Broadcasting, L.P. for $15.25 million in a transaction structured as an asset purchase agreement. The acquisitions will be funded through internal sources, borrowings under existing credit facilities and future credit market transactions.
With this purchase, Nexstar’s portfolio of stations that it owns, operates, programs or to which it provides sales and other services will increase to 96 stations in 51 markets reaching approximately 14.6% of all U.S. television households.
Perry A. Sook, Chairman, President and Chief Executive Officer of Nexstar Broadcasting Group, Inc., commented, “Our and Mission’s planned acquisition of five stations in four markets builds further scale and operating and financial leverage and represents another excellent opportunity to expand our platform in attractive, highly complementary markets. These transactions are consistent with our criteria for acquisitions that are accretive to free cash flow, further strategically diversify our revenue and operating base, create opportunities for virtual duopolies and present significant synergies with well-defined paths to realization. Under Nexstar and Mission’s ownership the stations will realize additional retransmission revenues as well as synergistic operating improvements, and on a pro-forma basis the acquisitions will be accretive to results and leverage neutral on a debt-to-cash-flow basis.
“Additionally, these stations are an excellent complement to our existing station portfolio in terms of market size and geographic alignment with Nexstar’s existing operating hubs, while offering the potential to develop additional virtual duopolies. The acquisition of the Des Moines and Sioux City stations marks Nexstar’s entrée into Iowa, an important state for political advertising activity, while the Rock Island station also reaches Iowa and will benefit from efficiencies related to Nexstar’s existing operations in Illinois where we now operate or provide services to six stations. At the same time, Mission’s acquisition of two stations in Binghamton enhances our overall presence in central/western New York where we currently operate or provide services to ten stations.”
The transactions are subject to Federal Communications Commission approval and other customary closing conditions, and are expected to be completed early in the first quarter of 2014.