For TV Broadcasters, Picture Is Improving by Andrew Bary
Summary: TV stocks have declined in recent years because of a fragmenting audience, ad dollars moving to the internet, and TiVo viewers skipping commercials. But the recent sale by The New York Times Co. (NYSE:NYT) of a group of TV stations to a private-equity group for $575 million clobbered Street estimates of $425m, suggesting there may still be a strong market for smaller outlets due to the popularity of their local newscasts, and because broadcast TV is gaining viewers at the expense of cable. Three operators -- Gray Television Inc. (NYSE:GTN), Lin TV Corp. (TVL), and Nexstar Broadcasting Group Inc. (NASDAQ:NXST) -- have typical LBO characteristics, including considerable debt, and sub-$1 billion market cap. GTN stations' ratings lead in 24 of its 36 markets, NXST has a low cash-flow valuation with lots of appreciation potential, and TVL might get a buyout bid from a shareholder that owns almost half of its stock already. Hearst-Argyle Television Inc. (HTV) is big, but majority holder Hearst conglomerate already owns 74% of the shares, and may well buyout the rest of its holders.
Related Links: Important TV News from this Week's CE Show, The Consolidation of Local Media, Why Broadcast TV Has No Need to Fear Video Sharing