Knight-Ridder Puts 8 TV Stations on Block to Reduce $929-Million Debt
Knight-Ridder Inc. said Monday that it plans to sell its eight broadcast television stations, partly to reduce its debt that has grown to $929 million with its recent purchase of a leading electronic information concern.
Knight-Ridder, which also owns 30 daily newspapers, had acquired the television stations in four separate transactions over the past decade for an aggregate price of $291 million.
Each station is affiliated with one of the three major networks and is on the VHF band, which runs from stations 2 to 13.
The company said it planned to sell the stations individually or in one or more groups.
The stations put up for sale are WKRN-TV in Nashville, Tenn.; KTVY-TV in Oklahoma City; WPRI-TV in Providence, R.I.; WTKR-TV in Norfolk, Va.; WTEN-TV in Albany, N.Y.; WJRT-TV in Flint, Mich.; WALA-TV in Mobile, Ala., and KOLD-TV in Tucson.
Charles Crane, a media analyst for Prudential-Bache Securities in New York, said the stations could command a price of about $350 million to $400 million.
He said he expects that a number of public and private buyers would be interested despite recent weakness in the advertising market because each station would go for less than $100 million.
In New York Stock Exchange trading, Knight-Ridder closed up 12.5 cents a share at $40.875.
James K. Batten, Knight-Ridder president and chief executive, said the company’s board approved the sale in part to pay for its $353-million acquisition in August of Dialog Information Services Inc. from Lockheed Corp.
Dialog’s electronic information retrieval service provides more than 320 databases covering business, technology, science and education. The service has 96,000 subscribers in 86 countries.
“In approving the Dialog acquisition, we knew it would be necessary to dispose of some assets to raise the funds to pay for the purchase,” Batten said.
He said the sale of the television properties will “allow the company to convert to cash a substantial amount of previously unrecognized appreciation, to significantly reduce its debt level and to offset much of the ongoing earnings per share dilution associated with the Dialog acquisition.” The Dialog acquisition boosted Knight-Ridder’s total debt to $929 million.
Knight-Ridder has owned television stations since 1978, when it bought the stations in Providence, Albany and Flint from Poole Broadcasting Co. for $45 million.
It acquired the Norfolk station in 1981 from Landmark Communications Inc. for $48 million and paid General Electric $38 million for the Nashville station two years later.
Knight-Ridder paid $160 million for the stations in Oklahoma City, Mobile and Tucson from the Evening News Assn. in 1986.
As a group, the television stations posted operating income of $14.5 million on revenue of $104.5 million in 1987, compared to operating income of $22.2 million on revenue of $102.6 million in 1986.
Frank N. Hawkins Jr., vice president for corporate relations and planning for Knight-Ridder, said the company expects that the stations will post an operating profit close to its 1986 level this year on higher revenue.
He declined to say what the company hoped to get for the stations, adding that it hopes to complete the sale by the end of the first quarter of 1989.
Goldman, Sachs & Co. has been hired to handle the sale.
Prudential-Bache’s Crane estimated that the stations have had pretax cash flow of about $30 million and that some recent station sales have gone at 12 to 14 times cash flow before taxes.
He said Knight-Ridder appears to have decided to “swap a modest growth business for a high-growth business” in moving away from broadcasting and into information services.
But he said newspapers will still account for about 85% of the company’s overall profit.
For all of 1987, Knight-Ridder earned $155.2 million on revenue of $2.07 billion.
Batten said the sale fits the company’s new strategic direction.
“We believe the acquisition of additional newspapers, business and electronic information companies, cable television operations and our own stock will help achieve our goals,” he said.
Knight-Ridder is a partner with Tele-Communications Inc., a Denver-based cable operator, in TKR Cable, a cable system with about 270,000 subscribers in New York and New Jersey.