By: E&P Staff
Journal Communications announced on Monday that its Journal Broadcast Group subsidiary has reached an agreement to purchase three television stations from Emmis Communications Corp. for $235 million. The stations are FOX affiliate WFTX-TV, FOX4 in Fort Myers/Naples, Fla.; ABC affiliate KGUN-TV in Tucson, Ariz.; and CBS affiliate KMTV in Omaha, Neb.
“We are enthusiastic about this opportunity for Journal Communications,” Steven J. Smith, chairman and CEO of Journal Communications, said in a statement. “The acquisition is very consistent with our strategy of creating multiple station platforms in high growth, mid-sized markets. We expect to integrate the stations quickly in order to focus on driving superior financial performance.”
Douglas Kiel, president of Journal Communications and CEO of Journal Broadcast Group, said in a statement: “In Tucson and Omaha, we are adding strong television stations to high-performing radio clusters, which will allow us to be even more effective in serving those communities and providing solutions for our advertisers. In Fort Myers/Naples, we have the opportunity to continue building a compelling local news presence in this vibrant market.”
The transaction is subject to Federal Communications Commission and other regulatory approval. The parties anticipate closing the WFTX and KGUN acquisitions in late 2005. At the same time, certain assets of KMTV will be acquired and Journal Broadcast Group will begin programming KMTV under a local marketing agreement.
In a note issued today by Merrill Lynch, the research firm said it has a “mixed-view” of the deal. “We like both the addition to two existing clusters where Journal Communications has performed well and the higher leverage. However, we are not excited about the long term prospects of TV, and as such, given the price paid, believe the returns could be harder to come by.”
The research firm maintains a “neutral” rating on the company.