Tribune to pay $2.7bn for local US TV stations

THE PUBLISHER of the Chicago Tribune newspaper said yesterday that it would acquire 19 television stations from Local TV Holdings LLC for $2.73bn in cash, making it the largest TV broadcaster in the United States.

The purchase from New York private equity firm Oak Hill Capital Partners is another step for Tribune, which also publishes the Los Angeles Times, in transforming itself largely to a broadcast company as it seeks to sell off its newspaper division.

Tribune, which currently has 23 television stations and eight newspapers, emerged from bankruptcy protection in December.

With Local TV, Tribune will now have stations large markets like New York, Los Angeles, Miami, Cleveland, Denver and Seattle and will reach the most households in the United States.

The company said the acquisition was especially important for its WGN America, a national feed of its Chicago TV stations that it repackages as a superstation and distributes through cable and satellite to more than 76m homes. Besides advertising revenue, TV stations get retransmission fees from cable companies looking to broadcast their programs on local TV.

“Retrans is a growing stream of revenue,” said Benchmark Co analyst Edward Atorino. “Internet revenue a few years ago was peanuts; now it’s getting into tens of millions of dollars. Mobile TV revenue is on the horizon.”

Tribune is the latest company to snap up local TV stations as the industry consolidates. Last month, Gannett Co, the largest US newspaper chain, announced a deal to buy Belo and its 20 local TV stations for $1.5bn.

Tribune’s broadcast stations reported 2012 revenue of $1.1bn in 2012.

Tribune said it had received financing of up to $4.1bn from JPMorgan, BofA Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse. This includes a new $300m revolving credit facility and the capacity to refinance existing debt.