Gray TV To Spin Off Dailies Into New Company

By: E&P Staff

Gray Television Inc. said Wednesday that it is spinning off its five daily newspapers and its telephone pager and wireless business into a new separately traded public company that will be led by the new head of its newspaper division, Thomas J. Stultz.

In the plan approved by Gray directors, the newspaper and pager businesses will be consolidated into a company called Triple Crown Media. Immediately after that spin-off, Bull Run Corporation will merge into Triple Crown, subject to approval by Bull Run shareholders. Bull Run has only one operating business, Host Communications, which is led by Stultz.

The new company would have a net revenue of approximately $115 million, Gray said, and would operate the broadcaster’s four Georgia dailies, including the Gwinnett Daily Post and The Albany Herald, plus its Indiana daily, The Goshen News. The dailies have a combined daily circulation of about 120,000. Gray’s GrayLink Wireless business provides paging and other wireless services in smaller metropolitan areas in Alabama, Florida and Georgia, where it also operates 14 retail locations.

When the spin-off is complete, Gray common shareholders will receive a dividend of one share of common stock of Triple Crown Media for every 10 shares of Gray common stock and for every 10 shares of Gray class A common stock. The spin-off will not require a shareholders vote, Gray said. It also said Triple Crown would distribute $40 million to Gray on the date the spin-off becomes complete, which Gray said it would use to draw down its debt.

“We believe the spin-off is a very intelligent way to separate our businesses in a tax-efficient manner that allows our broadcasting and newspaper publishing businesses to maximize their strategic objectives, and by combining with Bull Run, Triple Crown Media will benefit from the proven leadership of Tom Stultz, and combine complementary businesses,” Gray President Robert S. Prather Jr. said in a statement. He added the transaction avoids the “significant” standalone costs of spinning out Triple Crown as a standalone transaction.

Stultz, in a statement, said the spin-off will accelerate growth in the businesses beyond what they could achieve independently.

In its announcement, Gray noted that Stultz’s tenure as president of Gray’s newspaper division, the business grew from three newspapers with revenues of approximately $21.9 million in 1995 to five newspapers with revenues of approximately $44.8 million in 2004.

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