Sinclair to Buy River City for $1.2 Billion

Sinclair Broadcast Group Inc. said Thursday that it agreed to buy closely held River City Broadcasting for $1.2 billion, creating the nation’s seventh-largest television group and moving it into radio broadcasting for the first time.

Acquiring River City would give Baltimore-based Sinclair nine more TV stations, for a total of 29. Its stations would reach almost 15% of U.S. households in markets that include Baltimore; San Antonio, Texas; and Columbus, Ohio.

“This is a great event for the company,” said BT Securities analyst Mark McFadden. “It gives them more breadth and critical mass vis-a-vis the programming community and advertisers and puts them in a very strong position as an independent operator of TV stations.”

Sinclair shares jumped $5 to a record $32.25 on Nasdaq.

Radio and TV companies are in the midst of a spate of acquisitions, taking advantage of looser restrictions on the number of broadcast properties a company may own under the new U.S. telecommunications law enacted this year.

Sinclair is paying about 12 times River City’s cash flow of about $100 million for the past 12 months, in line with other recent acquisitions in the television and radio industries, McFadden said.

Sinclair also will become a radio operator by acquiring 34 River City stations, in markets including New Orleans; Memphis, Tenn.; and Buffalo, N.Y.

As part of the transaction, Sinclair will form a unit to be called Sinclair Communications Inc. that will consist of the combined broadcasting assets of both companies. Barry Baker, founder of St. Louis-based River City, would become its chief executive and president. The combined operations generated revenue of about $448 million and broadcast cash flow of $224 million last year, the company said.