Gannett to buy six Texas stations

It’s a $215 million cash deal just announced for London Broadcasting Stations in Texas, including KCEN (NBC) Waco-Temple-Bryan; KYTX (CBS) Tyler-Longview; KIII (ABC) Corpus Christi, KBMT (ABC) and its multicast channel KJAC (NBC) Beaumont-Port Arthur; KXVA (Fox) Abilene-Sweetwater; and KIDY (Fox) San Angelo.

Said Gracia Martore, Gannett CEO: “The addition of these stations will expand Gannett’s reach into some of the fastest growing markets in the nation and furthers our successful transformation into a diversified multi-media company. With more than 70% of London Broadcasting’s advertising revenues driven by local advertisers, this acquisition will provide us access to attractive new markets in which we believe our local digital marketing services group, G/O Digital, will thrive.”

Gannett anticipates the acquisition to be accretive to EPS within the first 12 months. The new stations are expected to generate revenue of approximately $50 million in 2014. The transaction is also expected to provide Gannett with certain tax efficiencies following the recent sale of assets associated with KMOV in St. Louis. Including expected synergies and the anticipated tax benefit, the purchase price implies a 6.7x average 2014/2015 EBITDA multiple.

The transaction is expected to close this summer, subject to regulatory approvals and customary closing conditions. The purchase price is subject to adjustment based on the net working capital of the stations at closing, and a portion of the purchase price will be held in escrow following the closing. After closing, Phil Hurley, London Broadcasting Company chief operating officer, will continue to lead the six stations. Hurley will report to Dave Lougee, president of Gannett Broadcasting.

Gannett said the purchases do not overlap with any of its current broadcast and publishing properties.