Gray Television agreed to buy privately-held Raycom Media in a deal they value at $3.6 billion. Gray’s offer for Raycom will consist of $2.85 billion in cash, $650 million in a new series of preferred stock, and 11.5 million shares of Gray common stock, the companies said. The figure represents a multiple of about 7.5 times a blended average of Raycom’s anticipated 2018-19 operating cash flow and 7.8 times a blended average of Raycom’s anticipated 2017-18 operating cash flow, according to the announcement. Wells Fargo has underwritten $2.53 billion in debt financing for the deal.
Gray will gain at least five Raycom towers through the purchase, according to the Inside Towers Database. The shortest, located in Hilo, HI, is nearly 158 feet AGL and the tallest, located in Baton Rouge, LA, is taller than 1,725 feet AGL. Its newest tower (nearly 630 feet AGL) was erected in 2008, in Bucksville, SC; the oldest is the Baton Rouge structure, erected in 1965. Gray owns 116 towers and the FCC has granted construction of 13 more.
If approved, the combined entity would consist of 142 full-power television stations serving 92 markets. Gray said the deal will create the third-largest portfolio of stations and markets in the U.S. To facilitate prompt regulatory approvals and closing, Gray will divest stations in each of the nine overlap markets rather than seek FCC waivers. The parties anticipate closing in the fourth quarter.
Raycom President and CEO, Pat LaPlatney, will become president and co-CEO of the combined company, which would still be called Gray, while Gray Chairman and CEO, Hilton Howell, will become executive chairman and co-CEO.
June 26, 2018
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