Nexstar boosts TV station consolidation with $270MN CCA acquisition

Michelle Clancy | 26-04-2013

Nexstar Broadcasting Group is expanding its stable of local TV affiliates with the addition of 11 stations from Communications Corporation of America and White Knight Broadcasting (CCA). Nexstar will also have a services agreement with Mission Broadcasting, which is acquiring eight stations from CCA.

The $270 million deal will boost Nexstar's portfolio to 91 stations in 48 markets, reaching about 13.9% of all US television households.
The planned acquisition of the CCA stations further broadens Nexstar's local television broadcasting platform with stations that are geographically complementary to Nexstar's operating base while also presenting significant financial and operating synergies with the company's existing portfolio, it said.
In 2014 – the first fiscal year following the closing of the transaction – the 19 acquired stations are expected to contribute approximately $100 million in incremental net revenue. Giving effect to approximately $12.5 million in projected synergies, the acquisition is expected to generate over $50 million in additional broadcast cash flow and to provide free cash flow accretion in the first year of approximately 20% over the levels expected to be generated by Nexstar's existing operations. The purchase price represents a multiple of approximately 5.7 times the average 2012/2013 broadcast cash flow of the acquired stations after giving effect to anticipated operating improvements and synergies identified by Nexstar.
"The transaction announced today again highlights Nexstar's role in the industry as a leading consolidator of stations in mid-sized markets through accretive transactions," said Perry Sook, chairman, president and CEO of Nexstar, in a statement. "The acquisition significantly expands our revenue and operating base with stations where we can quickly apply our operating and management disciplines to meaningfully improve their performance which we believe will result in significant free cash flow accretion immediately upon closing. The addition of the CCA stations builds further scale and operating leverage and represents another excellent opportunity for Nexstar to expand our footprint and portfolio in attractive and highly complementary markets."