Gannett to acquire Belo Corp.

McLean-based Gannett Co.  Inc. plans to acquire Dallas-based media company Belo Corp. in a deal valued at $2.2 billion.

Gannett said the deal would create a broadcast “Super Group,” making the company the nation’s fourth-largest owner of major network affiliates reaching nearly a third of all U.S. households.

“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,” Gannett President and CEO Gracia Martore said in a statement. “It will significantly improve our cash flow and financial strength, enabling us to quickly pay down debt while remaining committed to disciplined capital allocation.”

The number of Gannett TV stations would nearly double from 23 to 43, including stations to be serviced by Gannett through shared services or similar sharing arrangements.
The Gannett announcement comes just a week after Richmond-based Media General Inc. announced a merger with Nashville-based New Young Broadcasting Holding Co.

The combined Richmond-based company, which will keep the Media General name, will have 30 television stations operating in 27 markets, reaching 16.5 million of U.S. TV households.

In the Gannett deal, it will pay in cash $13.75 per share in cash for each Belo share, or approximately $1.5 billion total. Gannett also will assume $715 million in Belo debt.

The offer represents a 28.1 percent premium on Belo’s stock price on Wednesday.

When the deal is complete, Gannett’s broadcast segment will have greater geographic and revenue diversity, with 21 stations in the top 25 markets, the company said.
The broadcast segment is expected to contribute more than half of the company’s pro forma total EBITDA, and the digital and broadcast segments combined are expected to contribute nearly two-thirds of EBITDA.

The deal is expected to close by the end of the year. It is subject to subject to antitrust approval, Federal Communications Commission (FCC) approval, approval by holders of two-thirds of the voting power of Belo shares, and customary closing conditions.