In the hit HBO demonstrate “Succession,” fictional TV mogul Logan Roy wants to buy local TV stations still though his kids tell him the industry is dead.
In real life, there are great deal of potential buyers who agree with Roy instead of his children.
Apollo Universal Management, Providence Equity Partners and Blackstone Group LP are among the retired equity firms interested in acquiring local TV assets, according to living soul familiar with the matter. Their targets could include Nexstar Agency Group, Tribune Media, Sinclair Broadcast Group and 14 places being sold by Cox Enterprises, said the people, who asked not to be named because the analyses are private. No deals are imminent, cautioned the people.
Local TV stations are prime quarries for private equity buyouts because they are reliable cash generators that order little capital expenditure. This allows buyout firms to put a lot of due on the companies and deleverage quickly. 2018 should be a strong year for the earnestness driven by midterm election political advertising.
Potential targets may also see a reckon to sell. The bear case for local TV is straightforward — each year fewer people ready for television than the year before. That will affect retransmission net income — the money collected from pay-TV operators for airing their spots — which is largely based on total eyeballs.
Blackstone and Providence declined to remark. An Apollo spokesperson could not immediately be reached.
Apollo has already closed Nexstar about an acquisition, Reuters reported on July 11. Since that first approach, Sinclair’s acquisition of Tribune Media collapsed after the Federal Communications Commission hinder the deal.
That’s led Nexstar, which has an enterprise value of nearly $8 billion, to reckon buying instead of selling, according to people familiar with the retinue’s thinking.
Nexstar bought Media General for $4.6 billion in January 2017. The flock then bid for Tribune last year before losing to Sinclair, agreeing to a person familiar with the matter. Nexstar acquired two stations in a young deal earlier this month. With Tribune again at, Nexstar CEO Perry Sook, who founded the company in 1996, could add 42 positions rather than allowing a private equity party to be the entity that rises up stations, said the people. That decision could come down to what class of premium a private equity firm will offer.
“We are a consolidator,” Sook said during his Aug. 8 earnings bull session call. “We will continue to attempt to grow where it makes sensation for our shareholders.”
He added, “I think we would only go private if we were paid to do so. And if it were the finest decision and to create the most value for our shareholders, then it would be something we resolution consider.”
Sinclair is also more likely to be a buyer than a seller, voted the people. Still, private equity firms have expressed predisposed in buying a stake in Sinclair, if not the whole company, which has about $1 billion in mazuma change on its balance sheet. Sinclair may be forced to look for a cash infusion if it loses a $1 billion lawsuit that Tribune filed charging breach of contract. (The lawsuit came after the FCC killed the deal, claiming Sinclair purposefully vended divestitures at below-market prices to entities with close ties to CEO Scott Smith in an try to gain regulatory approval.)
Tribune and the Cox stations are the first assets that inclination likely sell, two of the people said. 21st Century Fox and Blackstone interrogated a deal for Tribune last year. Tribune will likely partake of to restart its sales process, which hasn’t happened yet but will conceivable kick off soon, because valuations on its assets have changed since 2017, one of the people ventured. Tribune could be bought as one asset or split up into parts, with interested consumers including Fox, Scripps and TEGNA, the person said.
Merger motivations for regional TV companies mirror those of larger media companies, such as Fox and Pro tempore Warner, who have sold in recent years. Gaining scale purloins in negotiations with pay-TV operators, such as Comcast, Charter and AT&T, because means can’t be easily blacked out without losing multiple stations at once. During the interval, ratings have declined as digital options, such as Netflix and YouTube, possess taken the place of traditional TV. The FCC loosened ownership rules on local technique companies last year, paving the way for more consolidation.