GRAY PAYING $500 MILLION CASH FOR 21 BENEDEK TV STATIONS
Gray Communications said it agreed to “letter of intent” to acquire 21 medium- to small-market TV stations owned by Benedek Bcstg. for $500 million cash. Deal, as structured, would permit Benedek to sell some of stations to other buyers and keep proceeds, with price for stations Gray acquired to be adjusted accordingly. “This is about as perfect a fit as one can come up with in the station business,” Robert Prather, Gray exec. vp-acquisitions, told Tues. teleconference.
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Benedek filed for Chapter 11 protection last week in U.S. Bankruptcy Court, Wilmington, Del., move that wasn’t expected to have adverse impact on transfer, principals said. Prather said Benedek bondholders would get back “a hundred cents on the dollar… in cash.” He said Benedek group would operate as Gray subsidiary and Pres. James Yager and Benedek’s top management would be retained. Yager said: “We just can’t imagine a company [Gray] that better fits” with Benedek and its management philosophy. Gray owns 13 stations, largest being WVLT-TV (Ch. 8, CBS) Knoxville in 62nd DMA.
Only significant signal overlap of 2 groups is with Gray’s WJHG-TV (Ch. 7, NBC) Panama City, Fla., and Benedek’s WTVY (Ch.4, CBS) Dothan, Ala. However, stations are in separate DMA’s, as defined by FCC and Nielsen, so there won’t be duopoly problem, parties said. Benedek several weeks ago had sold one of its largest-market stations -- WTRF-TV (Ch. 7, CBS) Wheeling-Steubenville, W.Va. -- which isn’t involved.
Combined groups will become largest owner of CBS affiliates with 20; 7 will be NBC affiliates, 7 ABC, one Fox. Yager and Prather said they weren’t expecting networks -- particularly CBS and NBC -- to attempt to restructure Benedek affiliation agreements as result of Gray takeover. Yager said new agreements had been signed recently with NBC, taking affiliations through 2011, and no “reverse compensation” was involved. He didn’t say how much, if any, compensation had been cut.
Benedek’s TV stations’ 2001 net revenue was $138.1 million, with cash flow of $47.5 million (excluding WTRF-TV), Yager said -- down from $66 million (including WTRF) in 2000. “We had a relatively good year in 2001,” despite general downturn in economy, Prather said, with Gray’s media (including Gray’s 4 small-market daily newspapers) net revenue of $156.3 million, TV cash flow of $40.8 million.