Nexstar Broadcasting said it agreed to acquire the assets of four stations in West Virginia for $130 million from West Virginia Media Holdings.
The stations are WOWK-TV, the CBS affiliate in Charleston/Huntington; WTRF-TV, the CBS affiliate in Wheeling/Steubenville, Ohio; WVNS-TV, the CBS affiliate in Bluefield/Beckley; and WBOY-TV, the NBC affiliate in Clarksburg/Weston.
The deal will give Nexstar 115 TV stations serving 62 markets in 25 states, reaching 20.5 million TV households or 18.1% of the U.S.
Nexstar said it will enter in to a time brokerage agreement with West Virginia Media Holdings once the deal clears the Hart-Scott-Rodino review so that it can receive the stations’ broadcast cash flow and pay a fee to WVMH. That agreement will remain in place until FCC licenses are transferred which Nexstar expects in late 2016.
The stations are expected to generate about $15 million in free cash flow and add 23 cents per year to earnings, Nexstar said. Nexstar pegged the multiple it’s paying at 6.3 times 2015/16 cash flow.
“By adhering to our disciplined acquisition criteria, we are acquiring these four stations at an attractive pro-forma multiple of broadcast cash flow and have identified significant synergies with well-defined paths to realization,” said Nexstar CEO Perry Sook. “We continue to expect that our platform growth, expanding distribution and digital media revenue, the return of political advertising revenue in 2016 and our focus on our balance sheet, cost of capital and leverage will allow us to extend our record of enhancing shareholder value on a near- and long-term basis.”
Wall Street agreed with Nexstar’s assessment of the deal. “We continue to like Nexstar’s accretive acquisition strategy and given that the company is adding less than 1% of coverage with these stations, we don't see this transaction interfering with any sort of deal with Media General,” said Marci Ryvicker of Wells Fargo. Nexstar has made an offer to buy Media General. Media General rejected the offer but has agreed to talk to Nexstar.
