In 1986, a family-owned television broadcasting company based in St. Paul, Minn., came to fruition. Over time, this operation would grow to 16 stations in markets as diverse as Tucson; Corpus Christi, Tex.; and San Luis Obispo, Calif.
Thirty-two years later, Cordillera Communications is exiting TV station ownership.
The buyers: One big publicly traded media company that just sold off its radio stations, and an Illinois-based player with a diverse portfolio of media properties.
In a pre-market announcement made Monday morning (10/29), Cordillera revealed that it will sell 15 of its 16 stations to The E.W. Scripps Company for the eye-popping price of $521 million.
Additionally, Cordillera is selling NBC affiliate KVOA-4 in Tucson to Quincy Media for an undisclosed price. A Form 314 filing is expected to be made with the FCC this week.
Cordillera is led by President Terry Hurley. In prepared comments, he said, “Our stations are as strong as they’ve been across any point in our 32-year history. We’ve had a good run, and we’re proud of how our stations have excelled over the years. We’re also heartened to know they’ll continue to be in exceptional hands.”
Why Cordillera is saying goodbye to TV station ownership has everything to do with a rapidly changing landscape for broadcast television, from the roll out — and cost — of adopting the Next Gen broadcast TV standard known as ATSC 3.0 to the Republican-controlled FCC’s desire to loosen the national ownership reach of broadcast TV companies in an age where unregulated Netflix, Hulu, Amazon and other “over the top” (OTT) video programming providers are rapidly attracting viewers.
“Cordillera understands that an evolving broadcast industry requires an ability to scale for the future,” the company said, also noting that “an auction process” generated “significant interest from established parties throughout the country.”
Scripps and Quincy were selected as the preferred acquirers.
Hurley continued, “The two buyers represent the best possible scenario: They are poised to grow the stations and empower them to compete in this changing media landscape, and, more importantly, they will provide a great home and opportunities for the dedicated employees of Cordillera.”
SCRIPPS’ SIZZLING SHOPPING SPREE
Some 10 weeks ago, The E.W. Scripps Co. had finalized the last of its deals that completed the multimedia company’s desired divestment of all of its radio stations.
With $83.5 million earned from the deals that saw Oklahoma-based Griffin Communications, the Craig Karmazin-led Good Karma Brands, the Kalmenson family’s Lotus Communications and the Carl Parmer-helmed SummitMedia obtain a piece of Scripps’ former radio division, Scripps on October 17 revealed that it is purchasing Triton, a top tech provider serving the audio media industry, for $150 million.
Now, Scripps is digging a little deeper into its piggy bank by agreeing to acquire 15 TV stations in 10 markets.
With the 15 Cordillera stations, Scripps — with its stock reaching a 52-week high of $17.59 on Oct. 22 — will be investing $671 million in its radio-free future.
“Through this transaction, Scripps will operate the No. 1-rated TV stations in a third of its markets, enhancing the durability of our portfolio,” Scripps President of Local Media Brian Lawlor said. “The acquisition also allows us to go deeper in new markets with the addition of three new duopolies, including two with Big Four combinations.”
Those new markets where Scripps will own two TV stations are comprised of Corpus Christi, Tex.; and Helena and Great Falls, Mont.
The acquisition grows the Scripps local television station footprint to 51 stations in 36 markets, with a reach of nearly 21% of U.S. television households. It also widens Scripps’ relationship with CBS and NBC, giving it 7 stations airing programming such as “The Big Bang Theory” and 11 stations offering dramas such as “This is Us” and “Manifest.” Scripps also has two FOX stations, and 18 stations with ABC affiliation agreements.
Scripps believes the Cordillera additions will be “immediately accretive” to margins for the Local Media segment and for the entire company. Based on Cordillera’s blended 2017 actual and 2018 estimated revenues of $158 million and EBITDA of $63 million, adjusted for synergies, the purchase price multiple is 7.2x net of tax benefits.
Cordillera expects both deals to be completed by close of first quarter 2019.
Behind Cordillera’s Exit From TV: Now at RBR.com
