Consolidation continues as Gannett buys owner of KING-TV
It’s the second recent deal among companies that own Seattle’s network TV affiliates, continuing a trend of consolidation.
Seattle Times staff reporter
Gannett’s deal to purchase KING-TV owner Belo will give it six stations in the Northwest: two in Seattle, two in Spokane and one each in Portland and Boise.
It will have a market presence in one of every three homes in the U.S. if regulators and Belo shareholders approve the deal, which calls for Virginia-based Gannett to pay $1.5 billion in cash and assume $715 million in debt.
Unlike Sinclair Broadcast Group’s deal in April to purchase KOMO-TV owner Fisher Communications, Thursday’s announcement didn’t spark concern among media experts about a shift in quality or political bent.
Gannett owns USA Today and is the largest newspaper publisher in the country by circulation. Its newspapers have given it a reputation as a “homogenizer of local news,” said Al Tompkins, senior faculty for broadcast and online at the Poynter Institute.
Its television stations carry no such reputation. In fact, Tompkins said, Gannett and Belo are a good corporate match, with similar respect nationally for their investigative work and willingness to give local stations some autonomy.
“Gannett has many stations that are really, really good,” Tompkins said. “Belo has a lot to contribute to the Gannett group, especially in the area of investigative and political coverage.”
The purchase is another example of media consolidation, however.
University of Washington professor of communications Randy Beam said larger companies can negotiate for more money through rebroadcasting agreements with cable companies. Gannett may believe its business will be more stable if it is bigger and more diversified beyond newspapers.
Beam said viewers aren’t likely to notice much of a difference.
By contrast, Sinclair, which is paying $361 million for Fisher’s Western U.S. franchise, is known for right-leaning news coverage. It was also buying a locally owned media group. For both reasons, that deal has caused more public outcry.
Still, the Belo sale did prompt some critics to argue that Gannett controls too much of what Americans read and watch.
Matt Wood, policy director for Free Press, a Washington, D.C.-based group that advocates for diverse media ownership, said the organization will likely ask the Federal Communications Commission to take a close look at the sale of Belo.
Media conglomerates aren’t as responsive to local needs as companies based in the communities they cover, said Wood.
“The more they treat a property like a property, the less investment you get in the coverage of a city,” he said.
KING hasn’t been locally owned since 1991, when the Bullitt family sold King Broadcasting to The Providence Journal Co., which merged in 1997 with Dallas-based Belo.
Under the agreement, Gannett will pay $13.75 per share — a 28 percent premium over Belo’s closing price Wednesday.
Shares of both companies soared to their highest prices since 2008. Belo shares jumped $3.04, or 28 percent, to close at $13.77 . Gannett’s stock rose $6.75, or 34 percent, to $26.60.
KING referred questions to a Belo executive, who did not return calls Thursday.
Gannett CEO Gracia Martore called the acquisition an “important step” in the company’s diversification and said it will significantly improve its cash flow and financial strength.
The acquisition will make Gannett, based in McLean, Va., one of the country’s largest owners of major network affiliates. It nearly doubles Gannett’s portfolio from 23 to 43 stations and gives it 21 stations in the country’s top 25 television markets.
With the Belo purchase, Gannett is acquiring KTVB in Boise, KGW in Portland, KING and KONG in Seattle, and KREM and KSKN in Spokane.
Gannett expects the deal to boost its adjusted earnings by 50 cents per share within the first 12 months and to generate $175 million in annual cost savings within three years after closing.
Belo CEO Dunia Shive said the sale is an “outstanding and financially compelling transaction” for her company’s shareholders.
The deal, which has been approved by the boards of both companies, is expected to close by the end of 2013. It needs approval from the FCC and at least two-thirds of Belo shareholders.
Belo executives and shareholders representing about 42 percent of the company’s voting power have agreed to support the sale, the companies said.
Seattletimes.com executive producer Ryan Blethen contributed to this story. Material from Times news services included in this report.