EW Scripps will buy ION Media for $ 2.65 billion in a deal backed by Warren Buffett's Berkshire Hathaway, which marks the latest round of consolidation in the broadcasting industry.
The billionaire investor has agreed to inject $ 600 million in preferred equity into the affiliate and has been given an option to buy 23.1 million additional shares in Scripps at $ 13 per share, about $ 3 higher than the closing price on Wednesday.
Buffett's focus on old media comes shortly after the 90-year-old investor plowed $ 570 million dollars into fast-growing cloud database company Snowflake, as Berkshire looks for ways to put the $ 1
As part of the deal, Berkshire will receive an 8 per cent dividend annually, reflecting an agreement with Occidental Petroleum, the US energy company whose acquisition of rival Anadarko Petroleum Mr Buffett helped finance last year with $ 10 billion. In addition to Berkshire's investment, the deal will be financed with $ 1.85 billion in secured and unsecured debt. Buffett has made a number of investments, including a controversial $ 6 billion stake in Japan's five largest trading houses and a $ 10 billion takeover of Dominion Energy's gas business.
The agreement values Florida-based ION at 8.2 times earnings before interest, taxes, depreciation and amortization in the last year to June, without taking into account $ 120 million in annual cost synergies. The total company's net debt will be 5.2 times ebitda, based on the last eight quarters on an annual basis.
ION Media, owned by Black Diamond Capital Management, a credit specialist, is known for broadcasting popular TV series such as Law & Order and CSI. The network broadcasts its programming through the television stations it owns, as well as affiliated television stations and reaches more than 100 meters home in the United States.
The agreement will strengthen Cincinnati-based Scripps after the company was spun out of Scripps Networks Interactive more than a decade ago. Scripps Networks Interactive was acquired by Discovery for $ 14.6 billion in 2017.
To secure regulatory approval from the Federal Communications Commission, Scripps has agreed a deal to sell 23 ION stations.
TV networks have in recent years struggled to compete with fast-growing streaming rivals such as Netflix and Hulu, while the battle for survival has intensified since major media, telecom and cable groups such as Disney, AT&T and Comcast launched "clips". of wire "services.