Marshall Broadcasting Group is buying three Fox affiliates from Nexstar — KMSS in Shreveport, La., KPEJ in Odessa-Midland, Texas, and KLJB in Quad Cities, Iowa — for $58.5 million.
Marshall Broadcasting is a “newly formed minority owned media entity owned 100% by Pluria Marshall Jr.,” according to Nexstar. The company will fund the acquisition through borrowings guaranteed by Nexstar. According to the FCC, African-Americans control less than 1 percent of all television broadcast stations.
“We believe the proposed transaction announced today presents an ideal framework for introducing and incubating a new, minority-controlled entrant to broadcasting, and for bringing additional news, information and specialized programming to MBG’s markets at the earliest possible opportunity,” Nexstar CEO Perry A. Sook said in a statement.
Marshall will launch local news and minority-focused public affairs programs at each station.
“With Nexstar’s support and commitment to guarantee financing for the Shreveport, Odessa-Midland and Quad Cities station purchases, we believe we are establishing a new paradigm that addresses recent proposed FCC regulation changes while expanding the opportunity for minority broadcasters to play a greater role in the U.S. broadcasting industry as owners and operators of television stations,” Marshall said.
More from Nexstar after the jump.
Nexstar Broadcasting Enters into Definitive Agreements with Marshall Broadcasting Group for Sale of Three Full-Powered Network Affiliated Stations
Nexstar Supporting Minority-Owned Marshall Broadcasting to Become FCC Licensee
Marshall to Launch New Local News and Sports Programming at the Stations as well as Minority Oriented Public Affairs Programming in Each Market
LOS ANGELES & IRVING, Texas–(BUSINESS WIRE)– Nexstar Broadcasting Group, Inc. (Nasdaq: NXST) (“Nexstar”) announced today that it entered into definitive agreements with Marshall Broadcasting Group, Inc. (“MBG”) for the sale of three network affiliated stations (“the stations”) in three markets for $58.5 million. MBG intends to fund the station acquisitions through borrowings which Nexstar has agreed to guarantee.
For over two decades, the Federal Communications Commission (“FCC”) has advanced proposals for the incubation of broadcast station ownership by disadvantaged businesses, including minority-owned companies. FCC data indicates that African-American ownership of television stations is abysmally low, with African-Americans controlling only 0.7% of all television broadcast stations. Under the terms of the agreements MBG will acquire three full-powered, FOX affiliated stations, KMSS-TV, KPEJ-TV and KLJB (TV) in Shreveport, LA, Odessa-Midland, TX and Quad Cities, IA, respectively.
Perry A. Sook, Chairman, President and Chief Executive Officer of Nexstar Broadcasting Group, Inc., commented, “We believe the proposed transaction announced today presents an ideal framework for introducing and incubating a new, minority-controlled entrant to broadcasting, and for bringing additional news, information and specialized programming to MBG’s markets at the earliest possible opportunity.”
The transactions are subject to Federal Communications Commission approval, the consummation of Nexstar’s previously announced agreements to acquire the stock of privately-held Communications Corporation of America and White Knight Broadcasting (“CCA”) and the stock of Grant Company, Inc. (“Grant”), and other customary closing conditions, and are expected to be completed in 2014. Subject to regulatory approval, MBG intends to assume the obligations of Mission Broadcasting, Inc. (“Mission”) as the acquirer of the Stations under various asset purchase agreements currently in effect between Nexstar and Mission.
Marshall Broadcasting Group, Inc. is a newly formed minority owned media entity owned 100% by Pluria Marshall Jr. Mr. Marshall is currently the president and chief executive officer of Equal Access Media Inc., which owns several newspapers serving African-American and minority communities, including The Texas Freeman and Houston Informer Newspapers, The Los Angeles Wave Newspaper Group, and the Los Angeles Independent Publications Group. In 2011, Mr. Marshall founded Integrated Multicultural Media Solutions, a media rep firm that assists advertisers and agencies in marketing products and services to multicultural audiences by providing marketing services, including promotions, grassroots marketing, advertising placement and custom content creation.
Mr. Marshall is a longtime media executive and civic activist who began his media career in 1979, while in college, with a series of media internships and part-time marketing positions at Cable News Network (CNN) and WXIA-TV in Atlanta, Georgia. Upon graduating, Mr. Marshall participated in a yearlong management development program at WLBT-TV in Jackson, Mississippi which led to his tenure as vice president and general manager at WLBM-TV in Meridian, Mississippi. During his five year tenure at WLBM-TV, Mr. Marshall attempted to become a broadcast station owner four separate times, but each transaction failed to be completed due to the inability to obtain financing. Mr. Marshall subsequently sought to purchase several newspapers from Media General, but was again unable to obtain financing for the purchase. In April 1996, Mr. Marshall finally was able to enter the broadcast ownership arena with his purchase of AM broadcast station WLTH, Gary, Indiana, a “news talk” radio station serving Northwest Indiana and the south Chicago suburbs and he continues to own this radio station today. The station was previously financed by an [African American-owned] insurance company in Chicago, and Mr. Marshall’s company assumed the debt and obligations of the previous owner.
“We are delighted to have the support of Nexstar to promote diversity of media ownership assets among minority operators,” said Pluria Marshall. “Over the last 30 years, I’ve devoted significant time and effort in seeking to purchase television and radio stations. The single key factor in each unsuccessful opportunity has been the inability to access the funding necessary for the purchase. On four separate occasions in the late 1980s and early 1990s, we actively pursued, but were unable to obtain financing for station purchases. Over this period, we made contact with at least eight institutional lenders that commonly provide broadcast financing. All of those lenders provided a range of reasons as to why they would not provide financing. With Nexstar’s support and commitment to guarantee financing for the Shreveport, Odessa-Midland and Quad Cities station purchases, we believe we are establishing a new paradigm that addresses recent proposed FCC regulation changes while expanding the opportunity for minority broadcasters to play a greater role in the U.S. broadcasting industry as owners and operators of television stations.”
MBG will be acquiring the FCC licenses and significant assets of the Stations, including program contracts, equipment, and real estate interests in connection with studio and tower sites and will enter into agreements whereby Nexstar will provide sales and other non-programming services to MBG. The services agreements will be a critical vehicle for cost savings, allowing MBG to use Nexstar personnel for engineering support, master control, traffic and billing, and other administrative functions that do not relate to control of the stations or their programming.
Under the terms of the proposed services agreements between Nexstar and MBG, MBG will be entitled to 70% of the revenue from advertising sold by Nexstar on the stations and will not provide for any bonus payments to Nexstar for achieving revenue goals. It will not be a fixed-fee payment; as total revenues increase, so does MBG’s share. This transaction structure provides MBG with incentive to seek the best programming and thus maximize station advertising revenue while providing significant cost savings benefits to MBG related to the use of Nexstar resources that are not associated with control of the stations or their programming.
Assisted by the cost savings and efficiencies from its sharing agreements with Nexstar, MBG plans to roll out an aggregate 24.5 hours of additional local news and sports programming on the stations it will acquire, with more to be developed. MBG also intends to develop a minority-oriented public affairs program that will air on its stations and be syndicated to other television stations nationwide. In addition, Nexstar will add 13.5 hours of local news and public affairs programming on the stations it owns in Shreveport, Odessa-Midland and Quad Cities.
Perry A. Sook, Chairman, President and Chief Executive Officer of Nexstar Broadcasting Group, Inc., concluded, “The proposed transaction with Marshall Broadcasting serves as a model to increase media ownership diversity and uniquely addresses our near-term objectives to complete the pending CCA and Grant transactions while extending our long-term, well-documented initiatives to serve the public interests and needs of local viewers, hometown businesses, and organizations in the markets where we operate. Nexstar’s focus on localism including expanded local news, sports and other programming remains a key element of our broadcast platform and the addition of new minority-oriented public affairs programming complements this strategy. As an established and long-time media executive with extensive broadcast operating experience, Pluria Marshall has the background and skills necessary to serve local interests while maintaining independent operations and programming decisions for the Stations.”