Nexstar buys Louisiana broadcasters for $270M

by Chris Nolter | Published April 26, 2013 at 10:19 AM ET

Increasing the pace of middle-market television M&A, Nexstar Broadcast Group Inc. (NASDAQ:NXST) and Mission Broadcasting Inc. announced a deal Wednesday, April 24, to acquire Communications Corp. of America and White Knight Broadcasting for $270 million.

Irving, Texas-based Nexstar is a publicly traded portfolio company of Boston private equity firm Abry Partners LLC. Perry Sook, the company's chairman and CEO, said in a statement that Nexstar aims to be "a leading consolidator of stations in midsized markets."

TV groups have sought to add scale as they negotiate compensation with cable operators that broadcast their content. Groups that own affiliates are also in talks with networks about payment for content they broadcast.

Sook has previously said that the company aims to build a portfolio generating $1 billion in revenue.

One of Nexstar's rivals in accumulating stations is Sinclair Broadcast Group Inc. This year, the Baltimore TV group agreed to buy Fisher Communications Inc. for $373.3 million; 18 stations from Barrington Broadcast Group for $370 million; and four stations from Cox Enterprises Inc. for $99 million.

Marci Ryvicker of Wells Fargo Securities LLC wrote Thursday that the key elements in Nexstar's purchase are the geography of properties and the number of duopolies, or markets with two stations, it will gain. Of the 19 stations involved, five are duopolies. Two are in markets where Nexstar already has a station, giving it a total of seven new duopolies.

The purchase of the Lafayette La.-based broadcasters comes to 7.9 times average Ebitda for 2012 and 2013, Ryvicker wrote. Counting benefits that Nexstar would expect, she put the valuation at 5.7 times Ebitda for 2013 and 2014. TV valuation metrics often blend odd and even years, to account for advertising spikes from political spending.

Sinclair has set up a small-market unit called Chesapeake TV that is run by Steve Pruett, former CEO of Communications Corp. of America.

Communications Corp. of America retained Houlihan Lokey Inc. bankers Lee Ann Gliha, Gregg Feinstein, Matt Spencer, Ryan Brown, Olivia Theroux and Ryan Huttar.