Moody's forecast a "wave" of merger and acquisition activity among broadcast stations, in a a May 7 industry analysis, citing arbitrage opportunities for retransmission fees.
"Broadcast acquisitions give buyers immediate financial arbitrage with minimal risk, allowing them to raise the retransmission fees paid by the seller's existing cable, satellite and telecom video service providers," Carl Salas, a Moody's vice president, wrote in the report.
Gannett's acquisition is expected to close by the end of 2013 and is subject antitrust approval, Federal Communications Commission approval and support by holders of two-thirds of the voting power of Belo shares.Gannett expects to finance the merger through cash on hand, bank financing and new debt. The company said it will continue its share buyback program, but this time with a $300 million authorization to be used over the next two years. Gannett will also maintain its dividend, the company said. Standard & Poors affirmed Gannett's BB debt rating on Thursday and changed its outlook on the company's debt from 'stable' to 'positive.' J.P. Morgan is providing financial advice and Nixon Peabody and Paul Hastings are serving as legal advisors to Gannett on the deal. RBC Capital Markets is providing financial advice and Wachtell Lipton Rosen & Katz is acting as legal advisor to Belo. -- Written by Antoine Gara in New York Follow @AntoineGara