On the face of it, the acquisition of seven Four Points Media television stations by Sinclair clears the deck at Four Points Media. But it does more than that – it also clears the deck of managed-but-not-owned stations at Nexstar Broadcasting at a time when the group is being shopped to potential buyers.
Nexstar assumed station operations for the group, which includes full power stations in Providence RI and Austin TX, two full power stations in Salt Lake City UT and one full power and two Class A stations in West Palm Beach FL, back in the spring of 2009.
According to our report at that time, the agreement paid Nexstar a guaranteed $2M annually for its services, plus incentives, and gives it a stake in the proceeds of any sale, including a minimum share of $10M if the sale takes place within three years.
RBR-TVBR reported back in July that Nexstar is on the block for the second time – it was shopped back in 2007 but pulled back in an adverse trading market.
The group was acquired from CBS by Four Points parent Cerberus Capital in a deal filed with the FCC 3/1/07 that was valued at $185M.
Wells Fargo analyst Marci Ryvicker weighed in on the Sinclair acquisition, saying that it is a great time to be a buyer for anyone with the necessary resources. She liked several aspects of the deal – its demonstration of Sinclair’s commitment to its core television business, the fact that it is unlikely to affect dividends adversely, and the fact that it doesn’t expose Sinclair to further dealings with Fox Network (and its aggressive stance on retransmission fee sharing). It was also seen as having a positive taxation benefit while not taking the group’s leverage into uncomfortable territory.