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.
Nexstar Broadcasting Group, Inc.Thomas E. CarterChief Financial
Officer972/373-8800orJCIRJoseph Jaffoni or Jennifer
Neuman212/835-8500 or nxst@jcir.com
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