Scale Matters in TV Deals

By IVCPOST Staff Reporter

Jul 08, 2013 03:42 AM EDT

On Monday, the fresh-out of bankruptcy Tribune Company, bought 19 stations from Local TV Holdings. This deal amounted to US$2.7 billion. Prior to this transaction, several weeks earlier, Belo Corporation was bought by Gannett Company. Belo Corporation turned over to Gannett its 20 television stations for US$1.5 billion.

Right now, being big in television was critical. The ecosystem made up of different components was maturing, with each part trying to get the better of the other parts. A media analyst aptly said to The New York Times on Monday, "It's time to gobble or get gobbled."

"Our investment thesis is simple. Scale matters," says Peter Liguori, who is chief executive of Tribune. The current TV deals are horizontal mergers, with the aim of aggregating assets in a specific category. The objective of the deal is leverage, not transformation, as the size of a company would help it land better deals with both distributors and suppliers.

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