Gannett to acquire TV broadcasting firm Belo Corp for $1.5 bn

Media company Gannett Co Inc today said that it will buy Belo Corp for $1.5 billion in cash and assume $715 million in debt, giving the Dallas-based television broadcasting company an enterprise value of $2.2 billion.

Gannett will pay $13.75 per share, a 28.1 per cent premium to the closing price of Belo on 12 June.

Belo's directors and executive officers, who collectively own about 42 per cent stake, have already agreed to vote in favor of the deal.

Gannett anticipates that the transaction will generate approximately $175 million in annual run-rate synergies within three years after closing.

Belo owns and operates 20 television stations - nine in the top 25 markets, and their associated websites. Belo stations, which include affiliations with ABC, CBS, NBC, FOX, and the CW, reach more than 14 per cent of US television households in 15 highly-attractive markets.

Gannett, the largest US newspaper publisher, said that the acquisition nearly doubles its broadcast portfolio from 23 to 43 stations, creating the fourth-largest owner of major network affiliates.

''The combination creates a broadcast ''Super Group,'' catapulting Gannett into the nation's fourth-largest owner of major network affiliates reaching nearly a third of all US households,'' the Virginia-based media giant said in a statement.

Upon closing, Gannett's broadcast segment will have greater geographic and revenue diversity, with 21 stations in the top 25 markets and will become the No1 CBS affiliate group, the No4 ABC affiliate group, and will expand its already No1 NBC affiliate group position.

''We have been successfully transforming Gannett into a diversified multi-media company with broadcast, digital and publishing components across high-growth markets nationwide, and this is another important step in the process. It will significantly improve our cash flow and financial strength, enabling us to quickly pay down debt while remaining committed to disciplined capital allocation,'' said Gracia Martore, president and CEO of Gannett.

''By enhancing our portfolio with one of the largest, most geographically diverse and network-balanced TV station groups in the country, the new Gannett will be well positioned to lead innovation, bolster our existing growth initiatives and take advantage of new opportunities in the emerging digital media landscape,'' she added.

Commenting on the transaction, Dunia Shive, Belo's president and CEO, said, ''I am confident that we have found an excellent partner in Gannett – they are a leading media company that shares our commitment to the highest levels of journalistic integrity and embraces an active approach to community involvement.''

The deal, which is expected to close by the end of 2013, will need antitrust approval and Federal Communications Commission approval.