NEW YORK – Gannett Co., the publisher of USA Today, is buying TV station owner Belo Corp. for about $1.5 billion. If approved, the all-cash deal will make Gannett the fourth-largest broadcast group in the U.S.
Gannett already owns television stations as well as dozens of newspapers. But the deal transforms Gannett from “a newspaper company with broadcast and digital assets to being a broadcast company with strong newspaper and digital assets,” said Ken Doctor, a media analyst with Outsell Inc.
Under the agreement announced Thursday, Gannett will pay $13.75 per share for the Dallas-based TV station operator. That represents a 28 percent premium over Belo’s closing stock price on Wednesday.
The acquisition nearly doubles Gannett’s portfolio of stations from 23 to 43, reaching nearly one-third of U.S. households. Gannett, which is based in McLean, Va., will own 21 stations in the country’s top 25 television markets. The company said the deal will give it access to what it said are some of the fastest-growing television markets, including Dallas, Houston, San Antonio and Austin, Texas, as well as Seattle and Portland.
The move should help stabilize Gannett at a time when the newspaper business is faltering. Last year, revenue at Gannett’s publishing business fell nearly 3 percent to $3.7 billion, compared with a year earlier. By contrast, broadcast revenue grew more than 25 percent to $906 million, much of it from political advertising.
In recent months, Gannett’s newspapers have turned to a new revenue source: charging readers fees to access many of their websites. Because of that, revenue in the publishing division was mostly unchanged at $871 million in the first three months of the year.
But broadcast revenue during the same period grew nearly 9 percent to $192 million, even without major political campaigns.
Gannett, the largest U.S. newspaper publisher by circulation, also will assume $715 million in debt. Gannett said it is paying for Belo with cash it has or plans to borrow.
After the announcement, the stocks of both companies soared to their highest levels since 2008. Belo Corp.’s shares jumped $3.04, or 28 percent, to close at $13.77, the high for the day. Gannett’s stock rose $6.75, or 34 percent, to $26.60 after peaking at $26.75.