The E.W. Scripps Company will buy ION Media for $2.65 billion to expand it broadcast footprint and national television networks business.
ION operates a national television network featuring crime and justice procedural programming along with 71 broadcast television stations in major markets including Los Angeles, Washington, D.C. and Phoenix.
Scripps said that by combining the business with its Katz networks and Newsy, it can create a full-scale national television networks business that reaches more than 100 million homes through over-the-air and pay TV platforms.
"This evolution of Scripps' national television networks business, through the combination of ION, the Katz networks and Newsy, repositions the company in the television landscape," said Scripps President and CEO Adam Symson in a statement. "With its strong revenue growth, high margins and significant cash flow, ION will make Scripps a more powerful and durable media business with significant near-term benefit as well as long-term value. ION Media is a distribution double threat – carried on cable and satellite through must carry while also capitalizing on cord-cutting and the growth of free over-the-air broadcasting. This transaction is another in a long list of Scripps' transformative moves to where we see opportunity for growth and to benefit from the evolving media landscape.”
Scripps will divest of 23 ION stations so the merged company can fully comply with FCC local and national ownership regulations. Scripps said it has already agreed to a transaction with a buyer, who has agreed to maintain ION affiliations for the stations.
The merger is expected to close in the first quarter of 2021.
Scripps expects about $500 million in transaction synergies over six years, reaching a run rate of about $120 million a year, which it said will be mainly driven by migrating the Katz networks to Ion digital subchannels as Katz's current distribution contracts expire.
Warren Buffett’s Berkshire Hathaway is helping finance the deal through a $600 million preferred equity investment in Scripps. Berkshire Hathaway also will receive a warrant to purchase up to 23.1 million Class A shares, at an exercise price of $13 per share.