Gannett, the publisher of USA Today, has agreed to buy Belo Corp. for about $1.5 billion, gaining TV stations to reduce its dependence on newspapers.
Belo Corp. spun off its newspapers, including the Dallas Morning News and the Providence Journal, into a separate company back in 2008, leaving it "one of the largest pure-play television companies in the country," as an executive bragged at the time. That undoubtedly ultimately made the deal announced today more attractive to Gannett, which is striving to diversify beyond print.
The acquisition will make Gannett the fourth-largest owner of major network affiliates, almost doubling the number of stations to 43 from 23. While media conglomerates such as News Corp. and Time Warner this year are following the example Belo set in 2008 and spinning off their publishing divisions, the broadcast-TV business is seeing mergers accelerate. Last week, Media General agreed to buy New Young Broadcasting Holding Co., while Sinclair Broadcast Group Inc. has spent more than $1.84 billion on broadcasters in the past two years.
"At the end of the day there'll be a handful of players," said Tracy Young, a media analyst at Evercore Partners.
The wave of mergers is driven by the fees stations and broadcast networks are beginning to extract from cable and satellite operators such as Comcast and DirecTV in exchange for distributing local-TV programming.
The transaction underscores Gannett's exposure to the weakening newspaper industry. The company's publishing business declined 23% in operating income last year from 2011. Gannett's broadcast division, meanwhile, gained 47% in the same period.
"We have been successfully transforming Gannett into a diversified media company with broadcast, digital and publishing components across high-growth markets nationwide, and this is an other important step in the process," said Gracia Martore, president and chief executive officer of Gannett.
~ Bloomberg News and Ad Age staff ~