Nexstar Broadcasting Group, Inc. (Nasdaq: NXST) (“Nexstar”) announced
today that it entered into definitive agreements with Marshall
Broadcasting Group, Inc. (“MBG”) for the sale of three network
affiliated stations (“the stations”) in three markets for $58.5 million.
MBG intends to fund the station acquisitions through borrowings which
Nexstar has agreed to guarantee.
For over two decades, the Federal Communications Commission (“FCC”) has
advanced proposals for the incubation of broadcast station ownership by
disadvantaged businesses, including minority-owned companies. FCC data
indicates that African-American ownership of television stations is
abysmally low, with African-Americans controlling only 0.7% of all
television broadcast stations. Under the terms of the agreements MBG
will acquire three full-powered, FOX affiliated stations, KMSS-TV,
KPEJ-TV and KLJB (TV) in Shreveport, LA, Odessa-Midland, TX and Quad
Cities, IA, respectively.
Perry A. Sook, Chairman, President and Chief Executive Officer of
Nexstar Broadcasting Group, Inc., commented, “We believe the proposed
transaction announced today presents an ideal framework for introducing
and incubating a new, minority-controlled entrant to broadcasting, and
for bringing additional news, information and specialized programming to
MBG’s markets at the earliest possible opportunity.”
The transactions are subject to Federal Communications Commission
approval, the consummation of Nexstar’s previously announced agreements
to acquire the stock of privately-held Communications Corporation of
America and White Knight Broadcasting (“CCA”) and the stock of Grant
Company, Inc. (“Grant”), and other customary closing conditions, and are
expected to be completed in 2014. Subject to regulatory approval, MBG
intends to assume the obligations of Mission Broadcasting, Inc.
(“Mission”) as the acquirer of the Stations under various asset purchase
agreements currently in effect between Nexstar and Mission.
Marshall Broadcasting Group, Inc. is a newly formed minority owned media
entity owned 100% by Pluria Marshall Jr. Mr. Marshall is currently the
president and chief executive officer of Equal Access Media Inc., which
owns several newspapers serving African-American and minority
communities, including The Texas Freeman and Houston Informer
Newspapers, The Los Angeles Wave Newspaper Group, and the Los Angeles
Independent Publications Group. In 2011, Mr. Marshall founded Integrated
Multicultural Media Solutions, a media rep firm that assists advertisers
and agencies in marketing products and services to multicultural
audiences by providing marketing services, including promotions,
grassroots marketing, advertising placement and custom content creation.
Mr. Marshall is a longtime media executive and civic activist who began
his media career in 1979, while in college, with a series of media
internships and part-time marketing positions at Cable News Network
(CNN) and WXIA-TV in Atlanta, Georgia. Upon graduating, Mr. Marshall
participated in a yearlong management development program at WLBT-TV in
Jackson, Mississippi which led to his tenure as vice president and
general manager at WLBM-TV in Meridian, Mississippi. During his five
year tenure at WLBM-TV, Mr. Marshall attempted to become a broadcast
station owner four separate times, but each transaction failed to be
completed due to the inability to obtain financing. Mr. Marshall
subsequently sought to purchase several newspapers from Media General,
but was again unable to obtain financing for the purchase. In April
1996, Mr. Marshall finally was able to enter the broadcast ownership
arena with his purchase of AM broadcast station WLTH, Gary, Indiana, a
“news talk” radio station serving Northwest Indiana and the south
Chicago suburbs and he continues to own this radio station today. The
station was previously financed by an [African American-owned] insurance
company in Chicago, and Mr. Marshall’s company assumed the debt and
obligations of the previous owner.
“We are delighted to have the support of Nexstar to promote diversity of
media ownership assets among minority operators,” said Pluria Marshall.
“Over the last 30 years, I’ve devoted significant time and effort in
seeking to purchase television and radio stations. The single key factor
in each unsuccessful opportunity has been the inability to access the
funding necessary for the purchase. On four separate occasions in the
late 1980s and early 1990s, we actively pursued, but were unable to
obtain financing for station purchases. Over this period, we made
contact with at least eight institutional lenders that commonly provide
broadcast financing. All of those lenders provided a range of reasons as
to why they would not provide financing. With Nexstar’s support and
commitment to guarantee financing for the Shreveport, Odessa-Midland and
Quad Cities station purchases, we believe we are establishing a new
paradigm that addresses recent proposed FCC regulation changes while
expanding the opportunity for minority broadcasters to play a greater
role in the U.S. broadcasting industry as owners and operators of
television stations.”
MBG will be acquiring the FCC licenses and significant assets of the
Stations, including program contracts, equipment, and real estate
interests in connection with studio and tower sites and will enter into
agreements whereby Nexstar will provide sales and other non-programming
services to MBG. The services agreements will be a critical vehicle for
cost savings, allowing MBG to use Nexstar personnel for engineering
support, master control, traffic and billing, and other administrative
functions that do not relate to control of the stations or their
programming.
Under the terms of the proposed services agreements between Nexstar and
MBG, MBG will be entitled to 70% of the revenue from advertising sold by
Nexstar on the stations and will not provide for any bonus payments to
Nexstar for achieving revenue goals. It will not be a fixed-fee payment;
as total revenues increase, so does MBG’s share. This transaction
structure provides MBG with incentive to seek the best programming and
thus maximize station advertising revenue while providing significant
cost savings benefits to MBG related to the use of Nexstar resources
that are not associated with control of the stations or their
programming.
Assisted by the cost savings and efficiencies from its sharing
agreements with Nexstar, MBG plans to roll out an aggregate 24.5 hours
of additional local news and sports programming on the stations it will
acquire, with more to be developed. MBG also intends to develop a
minority-oriented public affairs program that will air on its stations
and be syndicated to other television stations nationwide. In addition,
Nexstar will add 13.5 hours of local news and public affairs programming
on the stations it owns in Shreveport, Odessa-Midland and Quad Cities.
Perry A. Sook, Chairman, President and Chief Executive Officer of
Nexstar Broadcasting Group, Inc., concluded, “The proposed transaction
with Marshall Broadcasting serves as a model to increase media ownership
diversity and uniquely addresses our near-term objectives to complete
the pending CCA and Grant transactions while extending our long-term,
well-documented initiatives to serve the public interests and needs of
local viewers, hometown businesses, and organizations in the markets
where we operate. Nexstar’s focus on localism including expanded local
news, sports and other programming remains a key element of our
broadcast platform and the addition of new minority-oriented public
affairs programming complements this strategy. As an established and
long-time media executive with extensive broadcast operating experience,
Pluria Marshall has the background and skills necessary to serve local
interests while maintaining independent operations and programming
decisions for the Stations.”
About Nexstar Broadcasting Group, Inc.
Nexstar Broadcasting Group is a leading diversified media company that
leverages localism to bring new services and value to consumers and
advertisers through its traditional media, digital and mobile media
platforms. Nexstar owns, operates, programs or provides sales and other
services to 74 television stations and 19 related digital multicast
signals reaching 44 markets or approximately 12.9% of all U.S.
television households. Nexstar’s portfolio includes affiliates of NBC,
CBS, ABC, FOX, MyNetworkTV, The CW, Telemundo, Bounce TV, Me-TV, Live
Well and independent stations. Nexstar’s 43 community portal websites
offer additional hyper-local content and verticals for consumers and
advertisers, allowing audiences to choose where, when and how they
access content while creating new revenue opportunities.
Pro-forma for the completion of all announced transactions Nexstar will
own, operate, program or provides sales and other services to 108
television stations and related digital multicast signals reaching 56
markets or approximately 16.0% of all U.S. television households.
Forward-Looking Statements
This news release includes forward-looking statements. We have based
these forward-looking statements on our current expectations and
projections about future events. Forward-looking statements include
information preceded by, followed by, or that includes the words
"guidance," "believes," "expects," "anticipates," "could," or similar
expressions. For these statements, the Company claims the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
The forward-looking statements contained in this news release,
concerning, among other things, changes in net revenue, cash flow and
operating expenses, involve risks and uncertainties, and are subject to
change based on various important factors, including the impact of
changes in national and regional economies, our ability to service and
refinance our outstanding debt, successful integration of acquired
television stations (including achievement of synergies and cost
reductions), pricing fluctuations in local and national advertising,
future regulatory actions and conditions in the television stations'
operating areas, competition from others in the broadcast television
markets served by the Company, volatility in programming costs, the
effects of governmental regulation of broadcasting, industry
consolidation, technological developments and major world news events.
Unless required by law, we undertake no obligation to update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this news release
might not occur. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
release. For more details on factors that could affect these
expectations, please see our filings with the Securities and Exchange
Commission.
Copyright Business Wire 2014