Berkshire Hathaway makes a big bet on old media

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EW Scripps (NYSE: SSP) announced today that it will buy ION Media for $ 2.65 billion, in a deal backed by Warren Buffett Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B). The acquisition will require regulatory approval and Scripps plans to divest 23 ION stations in order to comply with ownership restrictions in various markets.

Scripps said the purchase would be immediately accretive to revenue growth, margins and cash flow, and is expected to generate $ 500 million in synergies over the next six years. The combination will create a powerhouse of network, cable and cross-platform media.

Warren Buffett. Source de l’image: The Motley Fool.

The deal will be funded with $ 300 million in cash and $ 1.85 billion in debt. Berkshire will make a $ 600 million preferred stock investment in Scripps to help fund the purchase of private ION. Berkshire will also receive a warrant to purchase up to 23.1 million Class A Scripps shares, with an exercise price of $ 13 each.

Scripps operates a portfolio of 60 TV channels, as well as a growing list of broadcast networks, including Court TV, Bounce and Laff. The company also operates the cross-platform news provider Newsy.

For its part, ION Media is the only independent national broadcast network, reaching more than 100 million households in the United States and approximately 96% of the population. The company has 71 owned and operated stations, with a range of popular syndicated programs, including staples like Law and order, Criminal Minds, NCIS: Los Angeles, Blue blood, and Chicago PD, among others. ION consistently ranks in the top 10 for network and cable audiences, but only 25th for ad revenue, providing a path for immediate financial improvement.

Scripps investors cheered the news, pushing the stock up more than 7%.



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