Young Broadcasting Inc. and Viacom Inc. confirmed early Wednesday morning
that Young's KCAL(TV) Los Angeles will become part of Viacom's CBS station
group, joining KCBS in a duopoly in the nation's second-largest market.
At $650 million, the price was about $50 million higher than expected, and
analysts called it an especially good deal for the financially troubled
Young.
And while some analysts thought the price was surprisingly high --
particularly for a company like Viacom, which is not known to be extravagant --
they also believed the synergies between the two Los Angeles stations made it a
good deal for the media giant.
After an announcement scheduled for Tuesday afternoon was canceled, Young
made its announcement at 7:01 a.m. EST -- 4:01 a.m. at KCAL -- followed by a
conference call at 8 a.m.
The deal is subject to Federal Communications Commission approval, and it is
expected to close around midyear.
'The combination of KCAL and KCBS will elevate Viacom to the top in
television-advertising revenue, with nearly 19 percent share of the $1.6 billion
L.A. ad market,' Viacom president and chief operating officer Mel Karmazin
said.
'We intend to operate KCAL as an independent station, taking advantage of the
wealth of Viacom assets,' he added. 'Working with the highly regarded KCAL team,
we intend to build on the pre-eminent presence they have established in sports
and news in the Los Angeles market.'
'The KCAL-TV acquisition clearly underscores the value created by television
duopolies,' Young chairman Vincent Young said. 'Both Young Broadcasting and
Viacom were able to come out winners due to the significant synergies inherent
in this type of transaction.'
Ironically, it was because of the government's former policy prohibiting
duopolies that Young had the opportunity to purchase KCAL in 1996. The Walt
Disney Co. owned the station, but it had to sell when it took over ABC, which
owned KABC-TV in the same market.
Since the policy change in 1998, Viacom -- which now owns 34 TV stations --
has been a major duopoly player, and it now owns eight in major
markets.
