Gannett acquires six London stations

[Rusty Muck 4378]

WLTX and KTHV should give you an idea of how Gannett runs small-market stations: in short, pretty well. These were bottom-feeders when Gannett bought them. KTHV is now on top, IIRC; and while WLTX is still behind WIS, they are at least a contender which they never were pre-Gannett.

 

This is very good news for the people working at the London stations, they're about to be beefed up big time.

 

That, and Phil Hurley, a key London executive, will be joining Gannett to help lead the stations through the transition process. Outside of any integration into Gannett proper, I highly doubt that any massive changes will take place.

[Big Country News 435]

 

Gannett: It's All Within Texas.

 

Gannett went from nothing here to making Texas the state with the most Gannett properties.

[sanewsguy 511]

Crap, I just realized Gannett's buying KIII. I usually watch this station when I go to Corpus Christi, which is frequently, so I'm not happy Gannett's buying them because they are a crap broadcaster. I hope Gannett isn't doing much damage change to KIII. KRIS isn't much better...

[TexasTVNews 1377]

Well Belo Corp nearly a year ago, and now London Broadcasting. Gannett and other media companies is on a buying spree. Let's not forget Gannett acquired Combined Communications in '79.

[Rusty Muck 4378]

Crap, I just realized Gannett's buying KIII. I usually watch this station when I go to Corpus Christi, which is frequently, so I'm not happy Gannett's buying them because they are a crap broadcaster. I hope Gannett isn't doing much damage change to KIII. KRIS isn't much better...

 

I mentioned it a bit earlier, but per the video story from KIII, top London executive Phil Hurley is being retained by Gannett to oversee the London station group in total.

 

Also worth noting is that Gannett will assume the balance of a ten-year LMA with KUIL-LD, which functions as KBMT's duopoly partner. (KUIL's PSIP is interestingly mapped as 12.5 and 12.6, run in concurrence with KBMT's four subchannels on virtual channel 12.)

[CircleSeven 1955]

I mentioned it a bit earlier, but per the video story from KIII, top London executive Phil Hurley is being retained by Gannett to oversee the London station group in total.

 

Also worth noting is that Gannett will assume the balance of a ten-year LMA with KUIL-LD, which functions as KBMT's duopoly partner. (KUIL's PSIP is interestingly mapped as 12.5 and 12.6, run in concurrence with KBMT's four subchannels on virtual channel 12.)

I'm not too sure if the Deathstar will buy KUIL outright or not but back in March, London was in the process of buying KUIL-LD outright.

 

New M&A Tonight!!!!

 

Looks like London is buying KUIL-LD (and its repeaters) outright from National Communications for $1.81M.

[sanewsguy 511]

 

I mentioned it a bit earlier, but per the video story from KIII, top London executive Phil Hurley is being retained by Gannett to oversee the London station group in total.

 

Also worth noting is that Gannett will assume the balance of a ten-year LMA with KUIL-LD, which functions as KBMT's duopoly partner. (KUIL's PSIP is interestingly mapped as 12.5 and 12.6, run in concurrence with KBMT's four subchannels on virtual channel 12.)

 

Doesn't matter. Still working for Gannett. I lost all of my sense of credibility for this company after I saw how stupid their legal department is.

[Rusty Muck 4378]

Doesn't matter. Still working for Gannett. I lost all of my sense of credibility for this company after I saw how stupid their legal department is.

 

Not that you can't watch their videos from an iPad anyway...

[cg41386 132]

WLTX and KTHV should give you an idea of how Gannett runs small-market stations: in short, pretty well. These were bottom-feeders when Gannett bought them. KTHV is now on top, IIRC; and while WLTX is still behind WIS, they are at least a contender which they never were pre-Gannett.

 

This is very good news for the people working at the London stations, they're about to be beefed up big time.

 

KATV is still #1 in Little Rock, for the most part. THV is generally a strong #2.

[Mrtraveler01 738]

 

I think I know the reason why they passed over KTXD: the original programming. It's a

!

 

They should hire Weird Al to be their program director.

 

 

(Just noticed that the backdrop to that show on KTXD is their parking lot. Classy operation indeed)

[CircleSeven 1955]

The Paperwork Is Up!!!!

 

KIII, KBMT, KCEN, KYTX & KIDY/KXVA. $215M is the purchase price.

 

Also on the purchase agreement (p.52 on the PDF), it also includes a future acquisition of KUIL from London, should that pending deal between KUIL's parent Bluebonnet (National Communications) & London is approved and consummated. They would have to file an application for Gannett to acquire it from London. Or should that deal is still pending, London would withdrawl its app, and Gannett would file to acquire KUIL from Bluebonnet themselves (I doubt they would go this route, because I think the FCC will likely approve the original app).

 

Anyway notice what Gannett is using as its subsidiary for the London stations. They are using KMOV's former licensee name "KMOV-TV, Inc." That would look extremely weird, unless they decide to rename that licensee name sometime soon.

 

Anyway this is the first time I've seen a Gannett-related applications are filed a 314. Usually they would file a 315, and many of the licensee titles would stay a status quo, like they did with the Belo deal last year.

[Samantha 2896]

Anyway notice what Gannett is using as its subsidiary for the London stations. They are using KMOV's former licensee name "KMOV, Inc." That would look extremely weird, unless they decide to rename that licensee name sometime soon.

This explains something that was said in the press release: "The transaction is also expected to provide Gannett with certain tax efficiencies following the recent sale of assets associated with KMOV in St. Louis."

 

...Not the first time. In 1997 Gannett and Argyle traded two stations (Buffalo and Grand Rapids for Cincinnati and Oklahoma City; Gannett needed to dump the TV stations because of other assets it owned in those media markets after absorbing Multimedia; in Cincinnati, Gannett kept the paper, while in Oklahoma City, Gannett kept a cable system). Combined Communications Company of Oklahoma is the WZZM licensee. There are also many, many cases of licensee names reflecting past owners (NW Communications of Phoenix is the licensee of KSAZ and translators, for instance). In addition there are some cases of ownership of one station by a licensee named for a sister: KRIS's licensee is KVOA Communications, for instance.

 

(That acquisition also is the reason Gari's B Package was created. Very quickly after the station swap Argyle merged with Hearst. In Oklahoma City Hearst wanted to bring KOCO under the standardized Hearst format with Image News (the A Package). Unfortunately for Hearst KWTV had begun using the theme the year prior, so they went to Gari and commissioned an alternative.)

[easttxtv 7]

 

They should hire Weird Al to be their program director.

 

 

(Just noticed that the backdrop to that show on KTXD is their parking lot. Classy operation indeed)

 

It's in the first floor of an office tower; these ( http://goo.gl/maps/sHwLX ) are the windows that are behind the hosts of shows done there. On the north side of the building ( http://goo.gl/maps/0DzLb ) is the logo signage for the station. I work less than 2 blocks from here. Most mornings after I get off work I can see the studio lights on through the windows. The 'studio' is in a former bank space; the bank moved across the street to another office complex to have access to motor bank and ATM facilities. After the bank moved out, London put KTXD in. Several nights, there were engineers staying at my hotel from some of the other now-former London stations, who were in town trying to get KTXD's signal and inner-workings going. This was back when (and just after) KTXD started showing MeTV.

[easttxtv 7]

I'm wondering how London will house KCEB, since it has, historically, never had it's own freestanding facilities to my knowledge. Would they get to share KYTX's facilities and non-tower infrastructure after the Gannett deal? Or would they have to go somewhere else? (Yeah, I know, dumb question) London never had KCEB's transmitter moved to KYTX's tower so they're still sharing KFXK's tower. There is nothing at the tower site where KFXK transmits besides the transmitter equipment that even remotely looks like a station structure that KCEB could use if they are booted from KYTX's studio building.

 

This deal caught me by surprise, $215 mil ca$h, I didn't know Gannett would want anything else in TX, and I *sure* didn't know London could be a ready seller. If the Nexstar deal would finish up, this will give Tyler 3 big group owners (when historically there's been only local or semi-regional owners there before) for the first time ever in the market.

[Thundershock MN 169]

 

The Paperwork Is Up!!!!

 

KIII, KBMT, KCEN, KYTX & KIDY/KXVA. $215M is the purchase price.

 

Also on the purchase agreement (p.52 on the PDF), it also includes a future acquisition of KUIL from London, should that pending deal between KUIL's parent Bluebonnet (National Communications) & London is approved and consummated. They would have to file an application for Gannett to acquire it from London. Or should that deal is still pending, London would withdrawl its app, and Gannett would file to acquire KUIL from Bluebonnet themselves (I doubt they would go this route, because I think the FCC will likely approve the original app).

 

Anyway notice what Gannett is using as its subsidiary for the London stations. They are using KMOV's former licensee name "KMOV-TV, Inc." That would look extremely weird, unless they decide to rename that licensee name sometime soon.

 

Anyway this is the first time I've seen a Gannett-related applications are filed a 314. Usually they would file a 315, and many of the licensee titles would stay a status quo, like they did with the Belo deal last year.

 

 

This explains something that was said in the press release: "The transaction is also expected to provide Gannett with certain tax efficiencies following the recent sale of assets associated with KMOV in St. Louis."

 

They are doing a like-kind exchange. This allows them to defer any capital gains from the sale of KMOV. In layman's terms from a tax standpoint the "KMOV, inc." subsidiary will have effectively swapped KMOV for KIII, KBMT, KCEN, KYTX, KIDY/KXVA as the combo of assets are likely equal in value (or, close to) little to no gain is realized by "KMOV, inc." from the original sale of KMOV.

 

Which brings me to a second point. "KTVK, inc." is called out in the Asset Aurchase Agreement as one of the "assignees." And, KMOV and KTVK collectively referred as the “Buyer” within the agreement. But, none of the licenses are being assigned to "KTVK, inc."....yet. I'm calling it now KCEB & KTXD are being excluded now in order to be used for a second like-kind exchange. Once the sale of KTVK is completed the "KTVK, inc." will purchase KCEB & KTXD to offset the sale of KTVK. Book It!

[Samantha 2896]

 

They are doing a like-kind exchange. This allows them to defer any capital gains from the sale of KMOV. In layman's terms from a tax standpoint the "KMOV, inc." subsidiary will have effectively swapped KMOV for KIII, KBMT, KCEN, KYTX, KIDY/KXVA as the combo of assets are likely equal in value (or, close to) little to no gain is realized by "KMOV, inc." from the original sale of KMOV.

 

Which brings me to a second point. "KTVK, inc." is called out in the Asset Aurchase Agreement as one of the "assignees." And, KMOV and KTVK collectively referred as the “Buyer” within the agreement. But, none of the licenses are being assigned to "KTVK, inc."....yet. I'm calling it now KCEB & KTXD are being excluded now in order to be used for a second like-kind exchange. Once the sale of KTVK is completed the "KTVK, inc." will purchase KCEB & KTXD to offset the sale of KTVK. Book It!

 

To quote an old KTVK ad... "Interesting!"

 

I'm reading through this agreement right now. I notice that they define the Drewry escrow agreement. Apparently there was also litigation that arose from the escrow agreement and from the attempted acquisition of KUQI (Fox, Corpus Christi) from a High Maintenance Broadcasting [the buyer was National Communications which would have SSA'd out operations to KIII]. These are among the Excluded Assets:

 

(o) All rights, claims, counterclaims, causes of action and rights of recourse of any of the applicable Sellers against the Drewry Parties or in connection with or related to the Drewry Litigation, including all right, title and interest in, to, and under the Drewry Escrow Deposit and any and all rights, claims, counterclaims, causes of action and rights of recourse of

any of Sellers under or in connection therewith, including pursuant to that certain Drewry Escrow Agreement, including all right, title and interest in, to, and under or claims, counterclaims, causes of action, or rights of recourse to or against any escrowed funds held pursuant thereto;

(p) All rights, claims, counterclaims, causes of action and rights of recourse of any of the applicable Sellers against the High Maintenance Parties or in connection with or related to the High Maintenance Litigation, including all right, title and interest in, to, and under the High Maintenance Escrow Deposit and any and all rights, claims, counterclaims, causes of action and rights of recourse of any of Sellers under or in connection therewith, including pursuant to that certain High Maintenance Escrow Agreement, including all right, title and interest in, to, and under or claims, counterclaims, causes of action, or rights of recourse to or against any escrowed funds held pursuant thereto;

In addition, there is this reference to KCEB and KTXD as being transitioned out of London group resources:

 

As such, to the extent not specifically addressed in the Schedules to this Agreement, Buyer and Sellers agree, and agree to cause their respective Affiliates to, use commercially reasonable efforts to work together prior to the Closing Date to arrange with the third parties to the Group Agreements to (a) remove stations KTXD and KCEB from the coverage of the Group Agreements as of the Closing Date and (b.) provide coverage for such retained stations of LBC under separate agreements between LBC (or its Affiliates) and such third parties.

There also seems to be some relationship between London and the Texas Rangers' KTXA contract:

 

Section 5.10. Assignment of Texas Rangers Contract. At the Closing and prior to the expiration of the Texas Rangers Baseball Affiliation Agreement, dated as of October 28 2009, by and between KXTA-TV [sic] and LBC, Sellers shall use commercially reasonable efforts to assign such Agreement to Buyer.

Gannett can cancel the deal beginning on August 26, and either party can terminate it beginning December 31.

[Thundershock MN 169]

 

To quote an old KTVK ad... "Interesting!"

 

 

In addition, there is this reference to KCEB and KTXD as being transitioned out of London group resources:

 

 

Gannett can cancel the deal beginning on August 26, and either party can terminate it beginning December 31.

 

They are preforming a delayed exchange. It says as much in the agreement (on page 54) with both parties agreeing to use an intermediary to conduct the sale. In order to preform a delayed exchange the seller must designate the replacement property within 45 days to the intermediary. And, the acquisition of the replacement property must be completed within 180 days of the sale of the original property. The KMOV sale closed on Feb. 28. Points #4-7 in this Forbes article explain these points.

 

Unless I'm missing something the schedules are missing from the agreement. I'd be curious to see them and if it lends further credence to my suspicion.

[Samantha 2896]

 

They are preforming a delayed exchange. It says as much in the agreement (on page 54) with both parties agreeing to use an intermediary to conduct the sale. In order to preform a delayed exchange the seller must designate the replacement property within 45 days to the intermediary. And, the acquisition of the replacement property must be completed within 180 days of the sale of the original property. The KMOV sale closed on Feb. 28. Points #4-7 in this Forbes article explain these points.

 

Unless I'm missing something the schedules are missing from the agreement. I'd be curious to see them and if it lends further credence to my suspicion.

 

I think schedules are omitted to hold the more private info; this seems to be standard for these agreements.

[CircleSeven 1955]

B&C states this morning that FTC/DOJ gave its "early termination" on this deal.

 

All they need now is that greenlight from the FCC. And that's all she wrote.

[GoldenShine9 1513]

It was a clean deal with no conflicts, so this should be an easy one for Gannett. Clean acquisitions are relatively painless.

[Samantha 2896]

On the 24th the FCC granted the application to transfer KUIL from Bluebonnet to London (KUIL License Company); through a clause in the Gannett acquisition, this station will become part of the Gannett family.

[The Frog 429]

I've heard speculation that Gannett will eventually buy KTXD to be a duopoly partner for WFAA. It goes that KTXD was not part of the separate Gannett purchase of the other London Broadcasting stations in Texas due to tax considerations of that sale combined with Gannett's sale of stations in Phoenix and St. Louis to Meredith (apparently the deals are structured that the sale of one offsets the purchase of the other.)

[Samantha 2896]

 

I've heard speculation that Gannett will eventually buy KTXD to be a duopoly partner for WFAA. It goes that KTXD was not part of the separate Gannett purchase of the other London Broadcasting stations in Texas due to tax considerations of that sale combined with Gannett's sale of stations in Phoenix and St. Louis to Meredith (apparently the deals are structured that the sale of one offsets the purchase of the other.)

 

They could now move that like-kind transaction with KTVK, Inc., and KASW-TV Inc., if they wanted to, for KTXD.

 

The other excluded station is KCEB, which would be a shell situation because of being in the same market as KYTX.

[Thundershock MN 169]

I've heard speculation that Gannett will eventually buy KTXD to be a duopoly partner for WFAA. It goes that KTXD was not part of the separate Gannett purchase of the other London Broadcasting stations in Texas due to tax considerations of that sale combined with Gannett's sale of stations in Phoenix and St. Louis to Meredith (apparently the deals are structured that the sale of one offsets the purchase of the other.)

I guess I'm the one that started that with my comments earlier in the thread. I suppose I should offer up a little more insight on why I threw that out there.

 

As stated "KTVK, Inc." was listed as a buyer in the Asset Purchase Agreement. But, none of the stations being purchased is being assigned to "KTVK, Inc." So, why include "KTVK, Inc." as a buyer? I think it's obvious that Gannett at least intends on doing a like-kind exchange using the "KTVK, Inc." subsidiary to offset the sale of KTVK, as well.

 

In order to preform a delayed exchange Gannett must designate the replacement property within 45 days to the intermediary. With the "UHF discount" in limbo Gannett is running close to the ownership cap. So, they need assets that aren't going to add a lot to their ownership cap percentage but are roughly equal in value. That's going to be a narrow list of targets. But, London's entire broadcast portfolio seems to fit the bill.

 

SunTX Capital Partners also holds a portion of London Broadcasting Group. We all know the PE firms have been cashing out in the latest round of M&A. So, is it that farfetched to think they would follow suit? Or, for them to exert some influence upon the leadership of London Broadcasting to cash out? And, if they are looking to "cash out" is there reason to keep the two stations in the fold...especially KCEB?

 

Gannett's $215m purchase price for the 6 London stations is roughly half the combined $407.5m sale price of KMOV & KTVK/KASW to Meredith. For the record the final sale price for KMOV was $177m and KTVK/KASW was $230m. I don't think it's a stretch to assume that KTXD is valued somewhere in that $200m neighborhood. If you have to "split" London in half by valuation that's probably the easiest (and, maybe the only) way to do it.

 

Why would London omit KTXD & KCEB? I guess I could understand if it was just KTXD...but, KCEB, too? That doesn't make sense. KCEB was hemorrhaging money as a stand-alone station prior to London acquiring it under a failing station wavier. Why would London break-up the duopoly of KYTX/KCEB? Breaking up duopolies rarely happens* and they'd have to seek out facilities to go it alone. However, if you step back what do these two stations have in common? They both present duopoly opportunities** for Gannett. KTXD with WFAA and pending approval KYTX again with KCEB. If the first batch of 6 gain approval these 2 would basically be assured to sail though the approval process. Given they are both duopolies neither would require much review as they already operate in the market nor, would they add to the ownership cap. If you are going to hold back some assets you might as well hold back the ones that are likely to meet a quicker approval process at the FCC.

 

Phil Hurley, the COO of London Broadcasting group, who oversees all London's stations will be joining Gannett when the deal closes. He will still oversee the stations as part of Gannett. And, given he will report directly to David Lougee, president of Gannett Broadcasting, it's safe to assume he'll serve as some type of "vice-president" in a regional manager type role. But, why leave the 2nd in command post of London? I suppose if you have nothing left to oversee that makes sense.

 

I know I'm making some assumptions here. I could be totally wrong and London really wants to keep these two stations. And, Gannett simply was going to assign a few of the six licenses to "KTVK, Inc." but had to assign them all to "KMOV, Inc." However, it feels like there is a piece of the puzzle missing from the deal to me...like there is another shoe to drop.

 

 

* I cannot think of a whole lot of duopolies that have been "broken-up." Ironically, the only one that comes to mind is KTVK/KASW...once the devesture of KASW is complete. I suppose if we count "virtual duopolies" you could add KDBC/KTSM to the list. But, I can't think of any others.

 

**KYTX/KCEB is currently a legal duopoly. London acquired KCEB using a "failing station waiver." Should Gannett look to acquire KCEB I suspect they'd just ask for a continuation of the "failing station waiver." I don't see a reason why they would be denied given the state of KCEB as a stand-alone prior to London's purchase. And, it would be maintaining "status quo."

[Samantha 2896]

And if KASW-TV Inc. holds merely the license to KASW while KTVK Inc. holds all the assets and property, KCEB probably becomes equal in value to KASW while KTVK becomes equal in value to KTXD.

 

Another reason KCEB was held back was probably to accomplish the above scenario in which KASW-TV Inc. also performs a like-kind exchange.