Why Tribune's $2.7B TV station buy is a big deal

The latest mega-merger in a consolidating media industry makes it a major owner of local outlets.

By Bruce Kennedy Jul 1, 2013 3:07PM

Pedestrians walk near the Tribune Tower, headquarters of the Tribune Company, on June 7, 2012 in Chicago, Illinois (© Scott Olson/Getty Images)As media stories go, this is a pretty big deal. And as the latest mega-merger in an already highly consolidated industry, this one will probably get at least an asterisk in future history books about the business of communications.

Tribune Company (TRBAA), the Chicago-based media giant, announced Monday it would purchase all 19 TV stations owned by Cincinnati-based Local TV, a firm principally held by Oak Hill Capital Partners, for $2.725 billion in cash.

Tribune's broadcasting group currently operates 23 TV stations, as well as WGN America on cable and WGN-AM radio. It also publishes nine daily newspapers, including the Chicago Tribune, the Los Angeles Times, The Baltimore Sun, the Orlando Sentinel and The Hartford Courant, along with three three major Spanish-language newspapers, several classified advertising companies and MetroMix Entertainment.

"This is a transformational acquisition for Tribune," Peter Liguori, Tribune’s president and CEO said in a press statement. "It makes us the #1 local TV affiliate group in America, expands the distribution platform for our high-quality video content, and extends the reach of our digital products to new audiences across the country."

The purchase also has a major impact on local TV across the country. Tribune's "broadcast portfolio" will nearly double to 42 stations -- including 14 affiliates of CW, 14 of Fox, five of CBS, three of ABC, two of NBC and four independents. What's more, Tribune will now own 14 stations in the top 20 U.S markets.

And remember, this news comes just weeks after Gannett (GCI) purchased Belo for around $1.5 billion. With that deal, Belo's 20 TV stations nearly doubled Gannet's local station holdings.

Sinclair Broadcast Group (SBGI), meanwhile, has spent around $2 billion over the past year-and-a-half buying 81 TV stations and four radio stations.

But The New York Times noted that the Tribune deal "eclipses all the others" and that the company is considering the sale or spin-off its newspaper properties to a variety of bidders, including the Koch brothers.

"2013 will go down as the year of transformational consolidation," Steve Ridge, president of the media strategy group at Frank N. Magid Associates, told The Times, "forever changing the landscape of local market television ownership and operation."

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