Tribune and Local TV Holdings said early Monday that they had entered into a definitive agreement for Tribune to acquire all of Local TV's television stations in a cash transaction. Local TV's stations are located in 16 markets, including Denver, Salt Lake City, Cleveland and Kansas City.
The deal would give Tribune 42 television stations, up from 23 stations. The company will become the largest affiliated station group for Fox Broadcasting, owned by
"This is a transformational acquisition for Tribune -- it makes us the No. 1 local TV affiliate group in America, expands the distribution platform for our high-quality video content and extends the reach of our digital products to new audiences across the country," Tribune Chief Executive
Tribune also would have five CBS affiliates, three
Local TV, which is based in Newport, Ky., was formed five years ago with the purchase of nine stations previously owned by the
The boards of both Tribune and Local TV approved the transaction, which is expected to close by the end of 2013 and will be subject to Federal Communications Commission approvals and an antitrust review.
The acquisition is the first major purchase for Chicago-based Tribune since it emerged from bankruptcy protection Dec. 31. It advances the company's mission to focus heavily on local news, which investors believe has opportunities for growth.
As reported last week, earnings at Tribune Co., parent of the Los Angeles Times, fell sharply in the first quarter. The company reported net income of $58.4 million in the three months, a 41% plunge from the $99.1 million in the year-earlier period. Revenue slid 3.3% to $705 million and pretax income declined 7.8% to $80.2 million.
Tribune is making the purchase through a combination of debt financing and cash on hand. The company has received committed financing of up to $4.1 billion from JP Morgan Chase,
Jonathan Friesel and Benjamin Diesbach, partners at Oak Hill Capital, thanked the Local TV management team in a statement. "During our partnership together, Local TV has delivered extraordinary growth and become a world-class broadcaster known for its quality programming, technological innovation and strong community service," Friesel and Diesbach said. "We wish Tribune well as they build on the history of success these stations have."
The acquisition also accelerates a trend of rapid consolidation in the television industry. Earlier this month, Gannett Co. agreed to buy
Tribune will have two stations in nine markets, including Denver, St. Louis, Indianapolis and Seattle. Two of Tribune's current stations -- KWGN in Denver and KPLR in St. Louis -- had been managed by Local TV so the deal will bring those stations under Tribune management.
Guggenheim Securities acted as financial advisor to Tribune, and Debevoise & Plimpton and Covington & Burling acted as legal advisors to Tribune on the transaction. Moelis & Company LLC;