Nexstar Broadcasting (NXST) to Acquire Certain West Virginia Media Holdings Assets in $130M Deal

Nexstar Broadcasting (NASDAQ: NXST) announced that it entered into a definitive agreement to acquire the assets of three CBS- and one NBC-affiliated television stations serving Charleston/Huntington, West Virginia (DMA #67), Wheeling, West Virginia/Steubenville, Ohio (DMA #157), Bluefield/Beckley, West Virginia (DMA #160) and Clarksburg/Weston, West Virginia (DMA #169) markets for $130.0 million from West Virginia Media Holdings LLC (“WVMH”). The proposed acquisition is expected to be immediately accretive to Nexstar’s operating results.

Under the terms of the agreement, Nexstar will enter into a Time Brokerage Agreement (“TBA”) with WVMH effective upon receipt of Hart-Scott-Rodino (“HSR”) clearance, whereby it will receive the stations’ broadcast cash flow and pay an annual fee to WVMH. The TBA will extend until the broadcast assets and FCC licenses are transferred, which is expected to occur in late 2016. Nexstar intends to finance the transaction with cash generated from operations and borrowings under its senior credit facilities.

The planned acquisition of these stations from WVMH further broadens Nexstar’s local television broadcasting and digital media platform with stations that are geographically complementary to the Company’s operating base while presenting significant financial and operating synergies. According to the 2014 BIA Kelsey Television Yearbook, three of the four stations being acquired have the #1 or #2 revenue shares in their respective markets.

Upon closing this and other previously announced transactions, Nexstar’s portfolio of stations that it owns, operates, programs or to which it provides sales and other services, will increase to 115 television stations serving 62 markets in 25 states, reaching approximately 20.5 million television households or 18.1% of all U.S. television households.

In the 2015/2016 cycle, the acquired stations are expected to generate approximately $15 million in free cash flow and are expected to provide free cash flow accretion in the 2015/2016 cycle of approximately $0.23 per share per year (definitions and disclosures regarding non-GAAP financial information are included later in this announcement). The purchase price for the four stations represents a multiple of approximately 6.3 times the expected average 2015/2016 broadcast cash flow of the acquired stations after giving effect to anticipated operating improvements and synergies identified by Nexstar.

Perry A. Sook, Chairman, President and Chief Executive Officer of Nexstar Broadcasting Group, Inc., commented, “By adhering to our disciplined acquisition criteria, we are acquiring these four stations at an attractive pro-forma multiple of broadcast cash flow and have identified significant synergies with well-defined paths to realization. The West Virginia markets, and the eastern Ohio reach of one of the stations, represent a natural complement to our existing operations in the mid-Atlantic region of the United States, with the added benefit of having high levels of political advertising activity. Reflecting Nexstar’s projected year-one operating and financial synergies we are acquiring these stations at an attractive pro-forma multiple of approximately 6.3 times average 2015/2016 adjusted broadcast cash flow, which is consistent with other recent Nexstar transactions.

“As a result, pro-forma for the completion of all announced and completed transactions, we are increasing Nexstar’s projected 2015/2016 free cash flow to approximately $482 million, or average pro-forma free cash flow of approximately $7.85 per share per year, in the current two year period. Notably, from a balance sheet perspective, the transaction does not alter our expectation that Nexstar will end 2016 with net leverage in the mid/high-3x range.

“Reflecting this and other pending transactions, Nexstar has acquired 66 television stations and four digital media businesses since 2011 for approximately $1.3 billion. Significantly, all of these transactions are accretive to free cash flow and strategically diversify our revenue and operating base. We expect to remain active with our M&A initiatives as our corporate, broadcast and digital media management teams have built excellent records of integrating and realizing the forecasted synergies and efficiencies from our numerous transactions and platform building strategy. We continue to expect that our platform growth, expanding distribution and digital media revenue, the return of political advertising revenue in 2016 and our focus on our balance sheet, cost of capital and leverage will allow us to extend our record of enhancing shareholder value on a near- and long-term basis.”

Bray Cary, Chief Executive Officer, West Virginia Media Holdings, Inc. said, “Nexstar is an industry leader and the sale of WV Media stations to Nexstar will broaden and strengthen the West Virginia media network we started 14 years ago. With Nexstar's WHAG-TV (Hagerstown, MD) station added to the list, the new network of stations will be able to provide all of our viewers coverage from West Virginia’s fastest growing area, the Eastern Panhandle. The additional non-stop news from the eastern Panhandle and Washington, DC area will truly create the largest and only true statewide news and marketing network. In addition, Nexstar has emerged as an innovative leader in the digital space which will create unique opportunities for our advertisers and marketing partners. This is a company that knows West Virginia as Mr. Sook worked at WOWK-TV early in his career and is an alumnus of Ohio University.”

The TBA with WVMH is subject to HSR approval and is expected to close in December 2015, with the station license assets subject to FCC approval and expected to close in late 2016.

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