Nexstar Rumored to have a discussion for a merger with Tribune

Perry Sook’s Nexstar Media Group may be hoping to succeed with Tribune Media where Sinclair Broadcasting failed, The Post has learned.

The chief executive of the second-largest TV station owner in the country met last week with the Justice Department’s antitrust boss, sources said.

The 30-minute get-together between the head of the Irving, Texas, owner of 171 TV stations and Assistant Attorney General Makan Delrahim was said to be a meet-and-greet, two sources said.

Though Nexstar and Delrahim, sources said, did not discuss the possibility of Nexstar making a bid for Tribune, the meeting could set the stage for talks should the Chicago media company, as expected, put itself up for sale again next month, sources said.

“Tribune is going to go up for sale imminently,” a source said.

Sinclair’s merger agreement with Tribune was terminated Aug. 9, soon after the FCC moved to stop the deal.

The Justice Department, too, was preparing to sue to block that merger in case the FCC did not act first, sources said.

Regulators were open to allowing the Sinclair-Tribune tie-up but were upset that Sinclair was not willing to divest the number of stations that it promised to — and was not transparent about some of the buyers of the stations it agreed to sell.

Nexstar, if it moves to buy Tribune and its 42 TV stations, would become the country’s biggest owner of television stations, surpassing Sinclair’s 193 stations.

Nexstar’s stations reach 39 percent of US television households.

As early as next month, the FCC is expected to increase the nation’s current 39 percent national audience cap to at least 50 percent — or even possibly eliminate the cap entirely, sources said.

Sook, if he pursues Tribune, would be pivoting from being a seller to a buyer. Two private equity firms have been in talks for more than a month to buy Nexstar — but its asking price is high and it appears a deal is not going to happen, a source close to those discussions said.

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Apollo Global Management, Providence Equity Partners and Blackstone Group LP are among the private equity firms interested in acquiring local TV assets, according to people familiar with the matter. Their targets could include Nexstar Media Group, Tribune Media, Sinclair Broadcast Group and 14 stations being sold by Cox Enterprises, said the people, who asked not to be named because the discussions are private. No deals are imminent, cautioned the people.

Local TV stations are prime targets for private equity buyouts because they are reliable cash generators that require little capital expenditure. This allows buyout firms to put a lot of debt on the companies and deleverage quickly. 2018 should be a strong year for the industry driven by midterm election political advertising.

Potential targets may also see a reason to sell. The bear case for local TV is straightforward — each year fewer people watch television than the year before. That will affect retransmission revenue — the money collected from pay-TV operators for airing their stations — which is largely based on total eyeballs.

Blackstone and Providence declined to comment. An Apollo spokesperson could not immediately be reached.

Nexstar and Sinclair also looking to buy
Apollo has already approached Nexstar about an acquisition, Reuters reported on July 11. Since that initial approach, Sinclair's acquisition of Tribune Media collapsed after the Federal Communications Commission blocked the deal.

That's led Nexstar, which has an enterprise value of nearly $8 billion, to consider buying instead of selling, according to people familiar with the company's thinking.

Nexstar bought Media General for $4.6 billion in January 2017. The company then bid for Tribune last year before losing to Sinclair, according to a person familiar with the matter. Nexstar acquired two stations in a small deal earlier this month. With Tribune again available, Nexstar CEO Perry Sook, who founded the company in 1996, could add 42 stations rather than allowing a private equity party to be the entity that rolls up stations, said the people. That decision could come down to what type of premium a private equity firm will offer.

"We are a consolidator," Sook said during his Aug. 8 earnings conference call. "We will continue to attempt to grow where it makes sense for our shareholders."

He added, "I think we would only go private if we were paid to do so. And if it were the best decision and to create the most value for our shareholders, then it would be something we would consider."

Sinclair is also more likely to be a buyer than a seller, said the people. Still, private equity firms have expressed interest in buying a stake in Sinclair, if not the whole company, which has about $1 billion in cash on its balance sheet. Sinclair may be forced to look for a cash infusion if it loses a $1 billion lawsuit that Tribune filed alleging breach of contract. (The lawsuit came after the FCC killed the deal, claiming Sinclair purposefully sold divestitures at below-market prices to entities with close ties to CEO Scott Smith in an effort to gain regulatory approval.)

Tribune and the Cox stations are the first assets that will likely sell, two of the people said. 21st Century Fox and Blackstone examined a deal for Tribune last year. Tribune will likely have to restart its sales process, which hasn't happened yet but will likely kick off soon, because valuations on its assets have changed since 2017, one of the people said. Tribune could be bought as one asset or split up into parts, with interested buyers including Fox, Scripps and TEGNA, the person said.

Merger motivations for local TV companies mirror those of larger media companies, such as Fox and Time Warner, who have sold in recent years. Gaining scale helps in negotiations with pay-TV operators, such as Comcast, Charter and AT&T, because channels can't be easily blacked out without losing multiple stations at once. Meanwhile, ratings have declined as digital options, such as Netflix and YouTube, have taken the place of traditional TV. The FCC loosened ownership rules on local media companies last year, paving the way for more consolidation.

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RadioPatrol said:

https://nypost.com/2018/08/20/sooks-nexstar-may-be-next-to-chase-tribune-media-merger/

What What. Yes there are rumors that the Owners of KRON4 in San Francisco wants to get Tribune stations like KTLA Los Angeles and WPIX in New York. How How

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Megatron said:

That would mean again Fox17 would have to be sold to a 3RD party Standard Media, Meredith etc.

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The first stations going on the block are WTKR-TV, Norfolk, Va.; WGNT-TV, Portsmouth, Va,; and WNEP-TV, Scranton-Wilkes-Barre, Pa., according to a filing with the FCC that was made public Tuesday following the reopening of the Federal government.

According to filing the markets where Nexstar identifies overlaps where it can’t own both Tribune and Nexstar stations because of local ownership rules are: Davenport, Iowa; Des Moines, Iowa; Ft. Smith, Ark,; Grand Rapids, Mich,; Harrisburg, Pa.; Hartford, Conn,; Huntsville, Ala,’ Indianapolis, In.; Memphis, Tenn.; Richmond, Va. and Salt Lake City, Utah.

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RadioPatrol said:

https://www.ftvlive.com/sqsp-test/2019/1/10/nexstar-to-spin-off-memphis-station

And WATN is mentioned as a spinoff candidate from Nexstar.

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