NEW YORK (
Sinclair Broadcast Group
(SBGI - Get Report) agreed Tuesday, June 4, to acquire four television stations owned by
TTBG, the parent company of
Titan Television Broadcast Group, for $115.35 million. SBGI also agreed to provide sales and other services to two other TTBG stations.
The pair of agreements extended SBGI's rapid rollup of TV properties, bringing its pro forma station total to a domestic-leading 140 in 72 markets and winning approval from Wells Fargo Securities analyst Marci Ryvicker in the process.
"We view today's announcement as a reiteration of SBGI's accretive acquisition strategy and anticipate more deals (potentially larger) to come over the next few months," the analyst wrote in a Tuesday update.
Ryvicker, who has an outperform rating on SBGI shares, estimated the accretion in this instance should be about 10 cents per share to free cash flow -- a projection she based on about $20 million in anticipated incremental Ebitda.
Moreover, because the company plans to finance the purchase with cash on hand or by drawing on a recently amended bank credit facility, she said the transaction's leverage impact would add only 0.05 times turns of leverage.
The six stations of Atlanta-based TTBG to be acquired or managed by Baltimore-based SBGI are in three markets: Fresno/Visalia, Calif.; Omaha; and Sioux City, Iowa. SBGI is taking control of two in each market, either by acquiring a duopoly outright (Fresno) or by acquiring a single station and running a second one through a local marketing agreement (Omaha and Sioux City).
The company said the most recent transaction translated into a multiple of 5.76 times average projected cash flow from 2013 through 2016. It also calculated the multiple for even versus odd years -- 6.3 and 5.3, respectively -- to account for major fluctuations in even-year political advertising, especially in presidential swing state Iowa.
-- Written by Richard Morgan in New York City.