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Kelly Broadcasting gets out to tune of almost $900 million for two TVs and an LMA
To much of the broadcasting industry, the executives at Kelly Broadcasting were considered lifers. Longtime family broadcasters with a lock on their core local market in Sacramento, Calif., the company had its third generation running its three stations and was generating strong operating results.
But the frustrations of being a small broadcaster, wariness over debt taken on to buy out other family members last year and the immense temptation of the even more immense prices that established broadcasters and start-up financial players are willing to pay have the Kellys surrendering, collecting almost $900 million to ease the pain.
After a quick auction, Hearst-Argyle Television agreed to pay $520 million for Kelly's Sacramento flagship NBC affiliate KCRA-TV and a local marketing agreement for nearby WB affiliate KQCA(TV). That's some 17 times expected 1998 cash flow, or 15 times if you adjust for the youth of the LMA deal. Hearst-Argyle executives say that from their perspective, tax benefits and other efficiencies will bring the valuation down to 12.5 times cash flow.
The Kellys also are getting $370 million from Meredith Broadcasting for their Seattle Fox affiliate, KCPQ(TV). Meredith will in turn trade the station for Tribune Co.'s Atlanta CBS affiliate, UHF station WGNX(TV). One executive pegged that deal as worth more than 18 times 1998 cash flow.
"We're a small group in a small pond," says Greg Kelly, general manager of KCRA-TV (He is the son of Jon Kelly...