U.S. broadcast M&A totaled $4.47 billion during the second quarter of 2017, according to estimates from Kagan, a group within S&P Global Market Intelligence.
TV deals accounted for $4.22 billion of the total, and Sinclair Broadcast Group, through two deals, was the biggest contributor to the M&A activity.
Sinclair announced earlier this year that it was buying Tribune Media at a $43.50-per-share price that represents $3.94 billion in cash and equity with another $2.7 billion in net debt. Using a 7.5x 2017-2018 average seller's cash flow multiple, Kagan estimated the value of Tribune’s 44 TV stations at $3.76 billion. Sinclair also announced this year that it is buying Bonten Media’s 17 full-power and five low-power TV stations for $240 million.
Other TV M&A deals include Edge Spectrum acquiring the licenses for 196 low-power TV stations and construction permits to meet the spectrum requirements for its planned nationwide IP broadcasting network, according to Kagan. Edge paid $72 million. In addition, Morgan Murphy Media paid Saga Communications $66.6 million for six owned-and-operated stations and three LMAs.
The volume for the second quarter is coming out ahead of Kagan’s figures for the first quarter for 2017. Broadcast M&A totaled $2.76 billion last quarter, and the vast majority of that was accounted for by the $2.59 billion CBS-Entercom radio station transaction. Only two TV station deals (from Gray Television and Meredith, separately) totaled $155 million during the first quarter.
But with the FCC announcing plans to reinstate the UHF discount—which allows TV broadcasters to count UHF stations as 50% toward the 39% national audience reach cap—M&A activity, as predicted, appears to be picking up. And the market segment is getting a significant lift from the Sinclair-Tribune deal, which Kagan said is the fourth-largest TV deal of the century.
Sinclair will be buying Tribune’s 42 television stations in 33 markets, cable network WGN America, digital multicast network Antenna TV, minority stakes in the TV Food Network and CareerBuilder, and a variety of real estate assets. The group will also gain 14 Fox affiliates, 12 CW, six CBS, three ABC, two NBC, three MyNetworkTV affiliates and two independent stations.