ATLANTA, Feb. 16, 2017 /PRNewswire/ -- Gray
Television, Inc. ("Gray," "we," "us" or "our") (NYSE: GTN and
GTN.A) announced today that it has reached an agreement with
Diversified Communications ("Diversified") to acquire Diversified's
two television stations for a total purchase price of $85 million. This acquisition will add two
more highly-ranked and top performing stations to Gray's growing
portfolio: WABI (CBS/CW) in the Bangor, Maine market (DMA 156) and WCJB
(ABC/CW) in the Gainesville,
Florida market (DMA 161).
"We are honored to be selected by Diversified as the new owners
of legacy stations WABI and WCJB," said Hilton H. Howell, Jr., Gray's Chairman and
CEO. "Both stations are highly valued institutions in their
respective communities with dedicated employees who share our
vision and culture. We look forward to building upon these
strong foundations and enviable records of success."
"This was a very difficult decision by our Board of Directors,
but we feel it is the right one," said Diversified's Board Chair,
Daniel Hildreth. "We believe that
under the ownership of Gray, WCJB and WABI will have greater
opportunities for long-term financial success which will ultimately
benefit both our employees and viewers."
Each of WABI and WCJB consistently achieves #1 ratings in all
major dayparts in its market, in both households and key
demos. Each station has also been the most watched television
station in its market throughout all of its weekday local news time
slots across at least the last nine Nielsen ratings periods.
Each station, in fact, often has more viewership than that of all
other Big Four affiliated stations in its market – combined.
Finally, according to BIA data, each station has capitalized on its
ratings dominance by achieving a market revenue share exceeding
fifty percent for the past several years.
WABI in Bangor was Maine's first television station and currently
is the nation's oldest continuously family-owned station. To
better serve its community, the station has long operated a news
bureau covering the state capital of Augusta, which lies outside of its DMA.
This transaction will reunite WABI with our station in Presque Isle, WAGM, which Diversified
previously owned, thereby facilitating further news and resource
sharing between these stations.
WCJB in Gainesville had the
only local news department among all commercial stations in its
market until 2010. It serves the well-known college town of
Gainesville, which is home to the
University of Florida, a large top-10
ranked U.S. public university in the Southeastern Conference with
an enrollment of approximately 50,000 students. We expect
that WCJB will share news and other resources with the dominant
television station to its north, Gray's WCTV in Tallahassee.
This transaction advances Gray's strategy of enhancing
shareholder value through select acquisitions of highly rated
stations that share the culture and values of our existing
television stations. Following their acquisition by Gray, we
expect that the stations will produce two-year, blended broadcast
cash flow margins greater than fifty percent. We expect the
acquisition will be immediately free cash flow accretive and allow
us to continue to de-lever our balance sheet.
The transaction represents an attractive purchase price multiple
of less than 7.0 times expected blended 2016-2017 pro forma
broadcast cash flow, including expected synergies. We
anticipate closing the transaction primarily through the use of
cash on hand at closing and, if necessary, borrowings under our
existing senior credit facility. Subject to receipt of
regulatory and other approvals, we expect the transaction will
close in the second quarter of 2017.
Cooley LLP served as legal counsel for Gray. Wells Fargo
Securities, LLC served as financial advisor and Sullivan &
Worcester LLP served as legal counsel for Diversified
Communications.
About Gray:
Gray owns and/or operates 100 television stations across 54
television markets that collectively broadcast over 200 program
streams including 101 channels affiliated with the CBS Network, the
NBC Network, the ABC Network and the FOX Network. Our
portfolio includes the number-one and/or number-two ranked
television station operations in essentially all of our markets,
which collectively cover approximately 10.1 percent of total
United States television
households.
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SOURCE Gray Television, Inc.