Nexstar
Broadcasting Group, Inc. (Nasdaq: NXST) (“Nexstar” or “the Company”)
announced today that it entered into a definitive agreement to acquire
the assets of KASW-TV, the CW affiliate serving the Phoenix, AZ market
for $68.0 million plus working capital from Meredith
Corporation (NYSE:MDP) (“Meredith”) and SagamoreHill of Phoenix, LLC
(“SagamoreHill”). The proposed acquisition is expected to be accretive
to Nexstar’s operating results immediately upon closing and inclusive of
all other previously announced transactions, will expand the Company’s
coverage to 57 markets in 22 states, reaching approximately 19.7 million
television households.
Nexstar intends to finance the station acquisition through borrowings
under its senior credit facilities. The transaction is subject to FCC
approval and other customary approvals, and is expected to close in the
first quarter of 2015.
In the first twelve months following the closing of the transaction,
KASW-TV is expected to generate approximately $14.0 million in adjusted
broadcast cash flow and is expected to provide free cash flow accretion
in the first year of ownership of approximately $0.30 per share
(definitions and disclosures regarding non-GAAP financial information
are included later in this announcement).
Commenting on the agreement, Nexstar Broadcasting Group President and
Chief Executive Officer, Perry A. Sook said, “The planned acquisition of
KASW-TV in Phoenix is highly accretive to Nexstar’s operating results,
further strategically diversifies Nexstar’s station portfolio, and
presents a great opportunity for the Company to leverage its
intellectual capital and operating management disciplines to drive
significant synergies. In addition, the transaction offers Nexstar
entrée to the Arizona and Phoenix markets which represent a natural
complement to our existing operations in the Southwestern region of the
United States.
“Pro-forma for expected synergies, including additional retransmission
revenues, the purchase price for KASW is less than 5.5 times the average
2014/2015 pro-forma projected cash flow. Under Nexstar’s ownership we
intend to initiate local programming and a local community orientation.
With an enhanced sales effort, the additional retransmission revenues as
well as synergistic operating improvements, the acquisition, on a
pro-forma basis, is leverage neutral and expected to add $0.30 per share
of free cash flow to Nexstar’s 2015 operating results.”
According to the 2014 BIA Kelsey Television Yearbook the Phoenix,
Arizona DMA is ranked as the 12th largest U.S. television market.
Meredith and SagamoreHill purchased KASW-TV from Gannett
Co., Inc. (NYSE:GCI) (“Gannett”) and Sander Media LLC (“Sander”) as
part of Gannett’s acquisition of Belo Corp. As part of Federal
Communications Commission approval, Meredith and SagamoreHill
voluntarily agreed to divest KASW to an independent buyer within 90 days
of its June 19, 2014 closing.
Definitions and Disclosures Regarding non-GAAP Financial Information
Broadcast cash flow is calculated as income from operations, plus
corporate expenses, depreciation, amortization of intangible assets and
broadcast rights (excluding barter) and loss (gain) on asset disposal,
net, minus broadcast rights payments.
Adjusted EBITDA is calculated as broadcast cash flow less corporate
expenses.
Free cash flow is calculated as income from operations plus
depreciation, amortization of intangible assets and broadcast rights
(excluding barter), loss (gain) on asset disposal, net, and non-cash
stock option expense, less payments for broadcast rights, cash interest
expense, capital expenditures and net cash income taxes.
Broadcast cash flow and free cash flow results are non-GAAP financial
measures. Nexstar believes the presentation of these non-GAAP measures
are useful to investors because they are used by lenders to measure the
Company’s ability to service debt; by industry analysts to determine the
market value of stations and their operating performance; by management
to identify the cash available to service debt, make strategic
acquisitions and investments, maintain capital assets and fund ongoing
operations and working capital needs; and, because they reflect the most
up-to-date operating results of the stations inclusive of pending
acquisitions, TBAs or LMAs. Management believes they also provide an
additional basis from which investors can establish forecasts and
valuations for the Company’s business.
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 80 television stations and 20 related digital multicast
signals reaching 46 markets or approximately 13.1% of all U.S.
television households. Nexstar’s portfolio includes affiliates of NBC,
CBS, ABC, FOX, MyNetworkTV, The CW, Telemundo, Bounce TV, Me-TV, and
LATV. Nexstar’s 48 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 57
markets or approximately 17.3% 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