Hey Now, You’re A Nexstar

Nexstar bids to buy Tribune

Image source: aradaphotography, Martial Red - Shutterstock

What's going on?

American telecommunications company Nexstar Media Group agreed to buy broadcaster Tribune Media on Monday for just over $4 billion – and both companies tuned in to see their stock prices rising.

What does this mean?

Nexstar is the second-biggest local television company in the US – but Tribune’s 42 stations would push it firmly into the number one spot, with a combined stable of some 200 Ws and Ks (tweet this). The combined company would reach around 39% of US household TVs, with Tribune’s stations helping Nexstar expand geographically and gain footholds in major markets like New York and Los Angeles.

Nexstar’s main rival, Sinclair Broadcast Group, tried to snag Tribune for itself earlier this year – but the deal fell apart after Sinclair failed to get regulators onside. The Nexstar-Tribune deal is similarly subject to regulatory approval, but Nexstar expects it to sail through.

Why should I care?

For markets: A tribute to Tribune.

Tribune’s stock rose by 11% on Monday, and Nexstar’s by 5%. As is typical when one company buys another, Nexstar’s paying a premium for Tribune: just over 15% more than it was worth on Friday. Investors betting on the deal going through bought Tribune’s stock – but the gap between its current valuation and what Nexstar is paying reflects the possibility that this deal also gets blocked by regulators. Nexstar’s shareholders seemed optimistic: following a record-breaking year for political ad sales (which may have helped make Nexstar itself a potential takeover target), the added clout of Tribune’s stations would likely put it in a stronger position to negotiate future purchases of TV shows from other networks.

The bigger picture: Deal and no deal.

TV marriages haven’t done so well lately: along with the Sinclair-Tribune disappointment, a proposed merger between US broadcasters CBS and Viacom also fell through. But more deals are on the cards: Sinclair is looking to bid for 21st Century Fox’s regional sports networks, which the media giant is selling as part of its merger with Disney.

Originally posted as part of the Finimize daily email.

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