Irving-based Nexstar Media Group Inc. announced Monday it was acquiring Tribune Media Co. for $6.4 billion, supplanting Sinclair Broadcast Group as the largest owner of local TV stations in the U.S.
The deal includes $4.1 billion in cash and the rest debt. The parties expect to close the transaction in the third quarter if it clears regulators.
Nexstar general counsel Elizabeth Ryder led the deal with the help of attorneys at Kirkland & Ellis and Wiley Rein in New York, Boston, Washington and Chicago (Ryder said the company has a 20-year relationship with its M&A counsel).
Tribune Media used Debevoise & Plimpton and Covington & Burling.
BofA Merrill Lynch provided financial advice to Nexstar and committed funding along with Credit Suisse and Deutsche Bank, although the transaction isn’t subject to any financing condition. Moelis & Co. and Guggenheim Securities were Tribune Media’s financial advisors.
Nexstar’s Ryder joined Nexstar Broadcasting as senior vice president and general counsel in 2009 after working as vice president of legal affairs for Dallas-based First Broadcasting for a year.
Before that, the George Washington University-trained lawyer was counsel at Drinker Biddle & Reath in Washington, D.C., where she handled legal and regulatory matters for several broadcasting clients, including Nexstar, for almost six years.
Ryder said Nexstar’s legal staff consists of six attorneys, including herself, and two paralegals. “I imagine we will be examining that as we add additional stations and digital operations to the company,” she said.
The Reading, Pa.-born Ryder originally wanted to be a fashion buyer and joined the management training program at Dillard’s after graduating from the University of Texas at Austin with a marketing and advertising degree. She later became interested in the law, specifically communications law when she interned at the U.S. Federal Communications Commission in the summer of 1994.
Nexstar initially bid for Tribune Media in May 2017 along with Sinclair, which ended up having the winning bid at $3.9 billion. But in July, FCC chairman Ajit Pai announced that he was ordering a hearing on the deal because of “serious concerns” he had about the merger.
Those concerns included a potential for “sham” transactions by Sinclair to reach federal regulatory limits on ownership of U.S. TV markets. Pai said he feared Sinclair would shed stations on paper, as necessary, but to related parties to maintain control.
Tribune Media terminated the Sinclair transaction in August and restarted its sale process in September.
“I don’t know exactly how many entities submitted final bids [but] we were the winning bidder,” Ryder said.
Axios reported that private equity firm Apollo Global Management submitted a bid that was less-than-a-dollar lower for the company but came with less regulatory risk and a shorter time to close.
Nexstar has gone from 42 stations when Ryder joined the company in 2009 to 174 stations when it bought Media General last year for $4.6 billion. The Tribune Media transaction will give it 42 more stations, bringing its total to 216 in 118 markets.
Tribune Media doesn’t own the Chicago Tribune, as the Tribune Co. split its newspaper and broadcasting assets into two separate companies in 2014 after emerging from bankruptcy at the end of 2012.
Nexstar will acquire all outstanding shares of Tribune Media for $46.50 per share, a 15.5 percent premium for Tribune Media shareholders based on its closing price on Nov. 30 and a 45 percent premium over Tribune Media’s closing price on July 16, the day the FCC’s Pai issued the hearing designation order for Tribune Media’s merger with Sinclair.
Tribune Media shareholders will be entitled to additional cash consideration of 30 cents per month if the transaction hasn’t closed by Aug. 31, 2019.
Nexstar expects the transaction to immediately boost its earnings, including projected operating synergies of $160 million in the first year after the transaction closing and planned divestitures.
The combined company is estimated to reach around 39 percent of U.S. television households after anticipated divestitures and the FCC’s UHF discount, Nexstar said.
The buyer said it will benefit from increased operational and geographic diversity and scale as a result of Tribune Media’s diverse portfolio of media assets.
Those assets include 42 owned or operated broadcast television stations in major U.S. markets, local news and entertainment content creation, broadcast distribution, entertainment cable network WGN America, a 31 percent stake in the TV Food Network and equity investments in several digital media businesses.
Nexstar said the combination will be one of the country’s leading providers of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms with annual sales of $4.6 billion and EBITDA of $1.7 billion.
Nexstar chairman, CEO and president Perry Sook said in a statement that the company has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that would bring 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,” he said.