Gray Television Inc GTN.O on Monday said it will acquire Raycom Media Inc, an employee-owned company, in a $3.6 billion cash-and-stock deal.
The transaction will consist of $2.85 billion in cash, $650 million in a new series of preferred stock, and 11.5 million shares of Gray common stock, the companies said.
The transaction will create the "single largest owner of top-rated local television stations and digital assets in the country," according to a press release from Gray.
The merger transforms Gray from a small, regional broadcaster into a leading media company with a nationwide scale.
“Today we announce the transformation of Gray Television into a true leader in the broadcast
television industry,” said Hilton H. Howell, Jr., Gray’s Chairman, President and CEO. “Combining our company with the excellent Raycom stations and the superb Raycom employees will create a powerhouse local media operation. Together, this new portfolio of leading local media outlets will excel at what they do best, which is to provide the local news that local communities trust, the entertainment and sports content that viewers crave, and the incredible reach that advertisers demand."
Both Gray and Raycom have a variety of television stations that are regarded as highly complementary with long histories to community service and local coverage and award-winning journalists.
“We are thrilled to be joining Gray Television as we share the same core values of
journalistic excellence and community service,” said Pat LaPlatney, Raycom Media’s President and CEO. “Together, we will be a stronger, more impactful force for our audiences, advertisers, and Page 5 of 6 communities. I have tremendous respect for the way Hilton Howell and Gray Television have grown their portfolio with a focus on localism. I look forward to working alongside Hilton and the wonderfully talented people of Gray Television as the combined entities create an even greater opportunity for growth as a leader in the broadcast industry."
When the deal closes, Raycom President and CEO, Pat LaPlatney, will become Gray’s President and Co-Chief Executive Officer. Also, Mr. LaPlatney and Raycom’s former President and CEO, Paul McTear, both of whom are currently members of Raycom’s Board of Directors, will join Gray’s Board of Directors. At that time, Hilton Howell will become Executive Chairman and Co-Chief Executive Officer of Gray.
The transaction is expected to close towards the end of 2018.
The combination of the two broadcasters will consist of:
142 full-power television stations serving 92 markets, the third largest portfolio of stations and markets in the country.
• A high-quality station portfolio that reaches 24 percent of U.S. television households, ranging from large markets such as Tampa-Sarasota, Cleveland, and Charlotte, to some of the smallest markets like Ottumwa, Fairbanks, Presque Isle and North Platte.
• 62 television stations ranked first in all-day Nielsen ratings in their local markets, which is the highest number of top-ranked television stations owned by any broadcaster.
• 92 percent of markets with the #1 or the #2 Nielsen rated local television station.
• Nearly 400 separate program streams including approximately 165 affiliates of ABC, NBC, CBS, and Fox, and over 100 affiliates of CW, MyNetwork, and MeTV.
Gray will also acquire many Raycom businesses in the deal. These include:
Raycom Sports, a marketing, production and events management and distribution
company.
• Tupelo Raycom, a sports and entertainment production company.
• RTM Productions, an automotive programming production and marketing solutions
company.
• Broadview Media, a post-production/digital signage company.
