November 2, 2011
Freedom Communications, owner of The Gazette, has agreed to sell its television division to Maryland-based Sinclair Broadcast Group Inc. in a $385 million deal that will leave the company and its newspapers free of debt, Freedom announced Wednesday.
The sale of Freedom's eight television stations, all of which are outside Colorado, is expected to close in four to six months subject to Freedom shareholder, Federal Communications Commission and antitrust approval.
Mitchell Stern, Freedom's CEO, said the television sale will eliminate the company's debt so management can concentrate on the 100 daily and weekly newspapers, magazines and other specialty publications.
Freedom, which is headquartered in Irvine, Calif., emerged from bankruptcy in April 2010 with $325 million in debt, some of which has been paid down in the last 18 months. The privately-held company began pursuing strategic alternatives for its properties about a year ago.
"This is the final chapter of bankruptcy," Stern said. "As a company essentially free of debt, Freedom will have greater financial flexibility allowing us to take advantage of opportunities that may arise in the future."
Stern dismissed earlier media reports that the Register was being sold to the Tribune Co. and merged with the Los Angeles Times or would be bought by MediaNews Group, owner of the Los Angeles Daily News and eight other daily papers in the greater Los Angeles area, as well as the Denver Post.
"People tend to speculate," he said, noting the Tribune remains in bankruptcy and MediaNews is busy working on its partnership with the Journal Register Co. under their new umbrella company, Digital First Media Inc., announced in September.
Stern said Freedom will now focus on completing its transformation into a digital media company that goes beyond traditional print to take advantage of the technological innovations that can better serve readers and advertisers. He did not provide any specifics, saying that would come as the company refocuses on its publishing properties.
Freedom, which began as a newspaper company, started expanding into broadcast in 1981 when it purchased KTVL/10, a CBS affiliate in Medford, Ore. The broadcast division has since added seven other stations and now has five CBS affiliates, two ABC and one CW and reaches 2.63 percent of U.S. households.
Sinclair is the nation's ninth largest broadcasting group. The company owns and operates, programs or provides sales services to 65 television stations in 39 markets. The stations currently reach 24 percent of U.S. households and include FOX, ABC, CBS, CW, NBC, MNT and Azteca affiliates.
The Freedom deal is Sinclair's second announced acquisition in two months. In September, Sinclair said it would buy Four Points Media's stations from Cerberus Capital Management, L.P. for $200 million.
"We are excited about bringing the Freedom stations into the Sinclair portfolio, particularly in light of our recent agreement to acquire seven television stations from Four Points Media," said Sinclair Chief Executive David Smith. "Not only will this transaction, when coupled with the Four Points transaction, result in us owning two full power stations in compliance with the FCC regulations in West Palm Beach, Freedom's largest market, but it allows us to expand our middle market position and network diversification."
Assuming quick antitrust approval, Sinclair plans to provide television management services for the Freedom stations through a local marketing agreement as early as Dec. 1.
Sinclair, which is publicly held, said it will finance the $385 million Freedom acquisition cost through a bank loan or by accessing the capital markets. Sinclair shares closed down 67 cents Tuesday at $8.91, in a bad day for the markets when the Dow lost 297 points. Sinclair shares have traded between $6.60 and $13.07 over the last year.