The E.W. Scripps Company (NASDAQ: SSP) will acquire ION Media for USD 2.65 Billion. ION Media is a national broadcast network that will combine with Scripps’ Katz networks and Newsy to create a full-scale national television networks business. This acquisition will yield USD 500 Million in synergies. Berkshire Hathaway will make USD 600 Million preferred equity investment in Scripps to finance the transaction. Berkshire Hathaway will receive a warrant to purchase up to 23.1 million Class A shares at an exercise price of USD 13 per share. Berkshire’s preferred stock will have no maturity date but will be redeemable five years after issuance. Berskhire will not receive any board seats and have no governance rights.
“This evolution of Scripps’ national television networks business, through the combination of ION, the Katz networks and Newsy, repositions the company in the television landscape,” said Scripps President and CEO Adam Symson. “With its strong revenue growth, high margins and significant cash flow, ION will make Scripps a more powerful and durable media business with significant near-term benefit as well as long-term value. ION Media is a distribution double threat – carried on cable and satellite through must carry while also capitalizing on cord-cutting and the growth of free over-the-air broadcasting. This transaction is another in a long list of Scripps’ transformative moves to where we see opportunity for growth and to benefit from the evolving media landscape.
“For more than 70 years, Scripps has been dedicated to local broadcasting and the markets we serve with an unparalleled commitment to quality objective journalism, community service and stewardship of the public’s airwaves,” said Symson. “Now, with this national broadcasting acquisition, Scripps will be the largest holder of broadcast spectrum, poised to take an even greater leadership role in the development of future business models that leverage ATSC 3.0 and spectrum to benefit the American people.”
“We have created tremendous shareholder value while managing debt through asset sales and high-cash-flow revenue streams such as retransmission fees and political advertising, working all the while to maintain a flexible balance sheet in order to capitalize on our next opportunity,” Knutson said. “Now we are building an even stronger financial foundation that will allow us to act as leaders in the future of the television industry while we serve our audiences and consumers in effective and efficient new ways.”
Morgan Stanley & Co. LLC and Methuselah Advisors acted as financial advisors to Scripps and arranged the equity investment by Berkshire Hathaway.