News of the sale comes just a week after the Department of Justice said Gannett had to sell KMOV in order to proceed with its acquisition of Belo Corp. Gannett says the sale satisfies the obligations, and that the close of the Gannett-Belo merger is “expected promptly.”
KSAW, the CW affiliate in Phoenix, will subsequently be purchased from Meredith by SagamoreHill. Meredith, which owns KPHO in Phoenix, will provide “certain services” for the station, according to a press release.
“Meredith is a highly respected multi-media company which shares our commitment to outstanding local journalism, and we are confident that these stations will be in good hands,” Gannett CEO Gracia Martore said in a statement.
More from Gannett after the jump.
GANNETT AND SANDER MEDIA ANNOUNCE THAT KMOV-TV, KTVK-TV AND KASW-TV WILL BE SOLD FOR $407.5 MILLION IN CASH
Close of Gannett-Belo Transaction Expected Promptly
McLEAN, VA and Phoenix, AZ – Gannett Co., Inc. (NYSE: GCI) and Sander Media LLC announced today that KMOV-TV in St. Louis, MO, will be sold to Meredith Corporation (NYSE: MDP). As part of the sale, Sander Media will convey to Meredith substantially all of the assets used in the operation of KMOV-TV which Sander Media will acquire upon close of the Gannett-Belo transaction. In addition, Gannett will convey certain other assets that are needed to provide services to KMOV-TV, which Gannett will acquire from Belo upon close of the Gannett-Belo transaction. The sale to Meredith, upon government approval, will satisfy Gannett’s and Sander Media’s obligations under the previously announced proposed consent decree with the U.S. Department of Justice in connection with Gannett’s acquisition of Belo.
Additionally, under a separate agreement, KTVK-TV and KASW-TV in Phoenix, AZ, will be sold to Meredith. At the closing, Meredith will simultaneously convey KASW-TV to SagamoreHill of Phoenix, LLC, which, through its affiliates, owns and operates two television stations in two markets. The agreed upon purchase price for the three stations is $407.5 million in cash, contingent upon regulatory approvals and other customary closing conditions.
Gracia Martore, President and Chief Executive Officer of Gannett, said, “We are very pleased to have reached this agreement with Meredith. Meredith is a highly respected multi-media company which shares our commitment to outstanding local journalism, and we are confident that these stations will be in good hands. We are also pleased to have reached an agreement with attractive terms for our shareholders, as these sales will significantly lower the effective purchase price for Belo while reducing only minimally the expected synergies associated with the Belo transaction, which we expect to close promptly.”
The sale of these stations is expected to have an impact of less than $2 million on Gannett’s previously disclosed projected annual run-rate synergies of $175 million within three years of closing of the Belo transaction. Gannett’s pending acquisition of Belo and the sale of these stations to Meredith together are expected to generate significant free cash flow and be accretive to non-GAAP earnings per share by approximately $0.43 in 2014. The company expects to use the proceeds of the sale to reduce debt and for other purposes consistent with Gannett’s stated capital allocation strategy. Gannett will maintain its strong broadcast presence in the St. Louis and Phoenix markets with KSDK-TV and KPNX-TV, respectively.