KSDK Parent to Buy Owner of KMOV; $1.5 Billion Deal; Needs FCC Approval. the Impact Here; Stations Expect to Remain Independent
Lisa Brown; Gail Pennington, St Louis Post-Dispatch (MO)
The parent companies of the NBC and CBS television affiliates in St. Louis are combining, but area viewers shouldn't expect to see any immediate changes in their local newscasts.
McLean, Va.-based Gannett Co., which owns KSDK (Channel 5) and 22 other TV stations nationwide, said Thursday that it's acquiring Belo Corp. of Dallas for $1.5 billion in cash, plus the assumption of $715 million in debt. One of Belo's 20 TV stations is KMOV (Channel 4).
The combination, which still must be approved by Belo shareholders and the Federal Communications Commission, would make Gannett the fourth-largest owner of major network affiliates, with 43 stations reaching nearly a third of U.S. households. CBS, Fox and Sinclair Broadcast Group are the top three.
"We are bringing together two highly respected media companies with rich histories of award-winning journalism, operational excellence and strong brand leadership," Gannett President and CEO Gracia Martore said in a call with analysts. Gannett is seeking to diversify its offerings, which include TV stations, newspapers and digital assets.
Gannett, which owns USA Today and more than 80 other newspapers, is paying $13.75 per share, a 28 percent premium over Belo's closing price on Wednesday. Gannett said it expects the deal to close by the end of the year.
The merger announcement sent Gannett's stock up 38 percent, to $26.60, up 34 percent from Wednesday's close. Belo's stock shot up 28 percent, closing at $13.77 Thursday.
In addition to St. Louis, Belo's other stations are in Kentucky, Virginia, North Carolina, Arizona, Texas, Louisiana, Washington state, Idaho and Oregon.
Because of FCC rules that limit the number of TV stations a company can own in a single market and bar, in most cases, the cross- ownership of local TV stations and newspapers, KMOV and four other Belo stations will operate under licensing agreements that vary by market, Gannett said.
David Lougee, president of Gannett Broadcasting, said an independent third-party, Jack Sander of Phoenix, will own and operate KMOV and television stations in Phoenix, Louisville, Ky., Portland, Ore., and Tucson, Ariz. Lougee and Sander are former Belo executives.
(Gannett owns the Courier-Journal in Louisville; the Arizona Republic in Phoenix; the Statesman-Journal in Salem, Ore.; and a half interest, with Lee Enterprises, in the company that publishes the Arizona Daily Star in Tucson.)
Lougee told the Post-Dispatch that KMOV's news and sales operations will be operated independently from KSDK after the sale closes.
"They will continue to be independent," Lougee said of the two stations. "They have a strong broadcast, just like we do."
In a presentation accompanying its announcement, Gannett said it expects to support station operations in the five markets, including St. Louis, "through a combination of joint sales and shared service agreements."
In St. Louis and Phoenix, those agreements will result in very few shared services, Lougee said.
"Those operations will be owned by another licensee and operated by that licensee, and they will be almost completely independent operations that will compete head-to-head in those markets," he said in an earlier conference call with analysts.
KSDK has been the dominant station in St. Louis almost since television came to town in 1947. In recent years, though, KMOV has edged closer and taken over first place at 10 p. …