Gray Television, Excalibur To Buy Television Stations From Hoak Media, Parker

(RTTNews) - Gray Television Inc. (GTN, GTN_A) announced a series of transactions through which Gray and Excalibur Broadcasting, LLC have agreed to acquire from Hoak Media, LLC and Parker Broadcasting, Inc. a total of 15 network-affiliated television stations in seven markets, excluding required divestitures, for $335.0 million in cash, plus a working capital adjustment.

Separately, Excalibur has agreed to acquire two Fox-affiliated television stations in one of the markets served by Hoak from Prime Cities Broadcasting Inc., a company that is unrelated to Hoak and Parker, for $7.5 million in cash.

In addition, Gray and Excalibur have agreed to enter into industry-standard shared services agreements through which Gray will provide back-office services and limited programming to Excalibur's stations in the Lincoln, Fargo, Bismarck, and Monroe markets. The shared services arrangements will commence upon Excalibur's purchase of those stations. Gray and Excalibur will enter into put and call option agreements through which Gray could acquire these stations when permitted by applicable law.

Upon completion of all previously announced and pending transactions, Gray will own and/or operate television stations in 39 television markets broadcasting a total of 123 distinct channels of programming, including 70 channels affiliated with one of the Big Four Networks. At that time, Gray will own the number-one ranked television station in 29 of the 39 markets as well as the number-one or number-two ranked television station operations in 38 of 39 markets. Gray then will operate "duopolies" in a total of 16 markets and reach about 7.33 percent of U.S. television households.

Gray said it expects that the transactions will provide significant free cash flow and be immediately accretive to Gray's free cash flow. Gray has identified approximately $5 million of operating synergies in the Hoak, Parker and Prime Cities transactions resulting in an effective purchase price multiple on a pro forma basis of 6.8 times 2013 and 2014 average EBITDA.

The parties expect the transactions announced today to close following receipt of regulatory and other approvals in the first or second quarter of 2014. Gray and Excalibur expect to finance their respective transactions with new term loans, cash on hand and/or by accessing the capital markets.