Nexstar to Acquire Tribune Media for $4.1 Billion

Nexstar is to acquire all outstanding shares of Tribune Media for $4.1 billion in a deal making it the largest regional U.S. TV station operator.

Nexstar has agreed to pay $46.50 per share in a cash transaction that is valued at $6.4 billion, including the assumption of Tribune Media’s outstanding debt. The transaction has been approved by the boards of directors of both companies and is expected to close late in the third quarter of 2019, subject to required regulatory approvals and satisfaction of other customary closing conditions.

Tribune Media’s portfolio of media assets includes 42 owned or operated broadcast TV stations in major U.S. markets; local news and entertainment content creation; broadcast distribution; a general entertainment cable network, WGN America; a 31-percent ownership stake in TV Food Network; and equity investments in several digital media businesses.

Perry Sook, chairman, president and CEO of Nexstar, commented, “Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies. We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today’s rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate. As with our past transactions, we have developed a comprehensive regulatory compliance plan and believe we have a clear path to closing. With committed financing and a plan for significant synergy realization that will result in only a minimal increase in Nexstar’s pro-forma leverage, the combined entity will be poised for growth, leverage reduction and increased capital returns for shareholders.

“The transaction offers synergies related to the enhanced scale of the combined broadcast and digital media operations, and increases our audience reach by approximately 50 percent. Furthermore, the addition of the Tribune Media broadcast assets further expands our geographic diversity, as pro forma for the completion of the transaction, we will serve 18 of the nation’s top 25 markets and 37 of the top 50 markets.

“Financially, the transaction will result in approximately 46-percent growth in Nexstar’s average annual free cash flow in the 2018/2019 cycle to approximately $900 million, or approximately $19.50 per share, per year based on approximately 46.2 million Nexstar shares outstanding. In the 22 years since we founded Nexstar, we have demonstrated prudent use of leverage and an ability to source capital at attractive rates to support our strategies for growth and the enhancement of shareholder value. Given our planned divestitures and the significant free cash flow from operation,s we intend to allocate capital from the combined entity to immediately reduce leverage and increase our return of capital to shareholders, while investing in our business to improve service to viewers and advertisers. This focus, combined with our time proven operating and integration strategies will enable us to extend our strong long-term record of shareholder value creation.”

Peter Kern, CEO of Tribune Media, said, “We are delighted to have reached this agreement with Nexstar as it provides Tribune shareholders with substantial value and a well-defined path to closing. Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets. We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers. The premium value our shareholders are receiving reflects the hard work of our dedicated Tribune employees in maximizing the value of our portfolio. I look forward to working closely with the Nexstar team to deliver on the value of this compelling combination and to ensure a smooth transition and integration of our companies.”

Thomas Carter, chief financial officer of Nexstar, added, “This accretive transaction marks further progress toward our goal of improving our competitive position by strategically expanding our operating base to realize the benefits of scale, increasing our strategic and financial flexibility, and driving shareholder value. Our long-term experience in integrating acquired assets and our success over the last seven quarters in outperforming our synergy targets and driving other operating efficiencies related to our acquisition of the Media General operations will serve us well as we add the Tribune Media assets to our operating base. With our experienced management team, operating discipline and focused approach to managing our capital structure and cost of capital, we believe the acquisition of Tribune Media presents another meaningful opportunity for Nexstar, the markets we serve and our shareholders. Notably, after giving effect to the transaction, the incurrence of debt, transaction expenses, and the expected first-year synergies of $160 million as well as in-process and planned asset sales, we expect our net leverage ratio to be approximately 5.3x at closing and with the free cash flow generated from this base of operations, we expect Nexstar’s net leverage to decline to the 4.0x range by the end of 2020, a year which will also benefit from significant 2019 renewals of retransmission consent agreements and the Presidential election.”