Updated from 9:20 a.m. ET with comments from the conference call and current market information.NEW YORK ( TheStreet) -- If anyone had any doubts as to where Tribune ( TRBAA) is headed, the Chicago-based media company cleared up any confusion by announcing plans to acquire Local TV Holdings, the privately-held owner of 19 television stations in 16 U.S. markets, for $2.725 billion in cash. Acquiring Local TV will increase Tribune's stable of local network-affiliated television stations to 42 spread out among 16 markets including New York, Los Angeles, Miami and Seattle. Tribune will also become the largest affiliate of 21st Century Fox ( FOXA)'s television group well as the top affiliate of CW, the joint-venture between Tribune and Time Warner ( TWX). So, who said TV is dead? "This is a transformational acquisition for Tribune," CEO Peter Liguori, the longtime television executive hired in January, said in a conference call with investors. "Our investment thesis is simple: scale matters. Scale enhances all elements of our business." Shares of Tribune, which trade over-the-counter, gained 5.5% to close on Monday at $60. The former chairman of Fox Broadcasting, Liguori said Tribune's expanded television holdings will give the company more clout when negotiating deals with the network and advertisers as well as in the development of new content. The acquisition follows a similar deal by Gannett ( GCI), the country's largest newspaper company, which announced plans to purchase Belo Corp. ( BLC), the Dallas-based broadcast television-station operator, two weeks ago in a $1.5 billion deal that increased McLean, Virginia company's broadcast portfolio from 23 to 43 stations. Tribune, the company said in a statement, will become the country's largest commercial TV station owner once the deal closes later this quarter. Tribune also said the deal will be immediately accretive to Tribune earnings, an important point considering the company exited bankruptcy in December after a messy four-year effort to clean-up its finances following its 2007 buyout led by the real estate mogul Sam Zell. The acquisition of Local TV, based in Newport, KY., comes as Tribune has hired Evercore Partners and JPMorgan Chase to explore the possible sale of its eight daily newspapers, a group that includes the Los Angeles Times, the Chicago Tribune, the Orlando Sentinel, the Baltimore Sun and the Hartford Courant. Among those interested in buying Tribune's newspapers are David and Charles Koch, the multi-billionaire owners of the oil and chemicals conglomerate Koch Industries.
Tribune is under pressure from labor unions and activists wary of the Koch's funding of political groups and organizations critical of issues including collective bargaining, curbing global warming and the Affordable Care Act. Tribune Chairman Bruce Karsh, the president of Oaktree Capital Management, the company's largest shareholder, has said selling the newspapers is just one option being considered. By combining with Local TV, Tribune will own 14 CW affiliates, 14 Fox stations, five CBS affiliates, three ABC affiliates, two with NBC and four independents. To finance the deal, Tribune received a pledge of as much as $4.1 billion from JPMorgan Chase, Bank of America Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse, including a new $300 million revolving credit facility. The arrangement will allow Tribune to refinance its existing debt, the company said. JPMorgan Chase also owns a 9.1% stake in the company. The company said the combination will generate more than $100 million in annual "run-rate synergies" within five years of the deal closing. -- Written by Leon Lazaroff in New York >To contact the writer of this article, click here: LeonLazaroff.>.