The E.W. Scripps Company announced its decision to purchase national broadcast network ION Media for USD 2.65 billion. The acquisition will also yield USD 500 million in synergies, set contractually over the next six years, ensuring the combination of Scripps' Katz networks and Newsy.
More than 100 million homes have access to ION. The platform has consistently achieved annual revenue growth and EBITDA margins well beyond industry averages. The purpose of the offer is for “advertisers a larger platform on which to reach their audiences.” According to Scripps, ION has the fifth-largest viewership average in primetime among broadcast networks. Scripps expects ION Media’s national advertising revenue to be down by mid-teens percentages for 2020. The network operates for 60 television stations in 42 markets.
ION distributes its programming through Federal Communications Commission-licensed television stations it owns in 62 markets and 124 affiliated TV stations, reaching 96% of U.S. homes. ION elects government-mandated must-carry provisions for cable distribution rather than negotiating for retransmission revenue, thereby ensuring its programming is available on cable and satellite systems.
ION Media and the five Katz networks operate in the over-the-air (OTA) television marketplace, which saw 67% growth, to 25% of all TV households, from 2018 to Q3 2019. As a result of the pandemic, OTA viewership growth is projected to accelerate.
Scripps Executive Vice President and Chief Financial Officer Lisa Knutson said the company will capitalize on ION's nationwide reach and operational excellence to drive growth, further enhance company cash flow, and realize significant synergies. Knutson, who also leads Scripps' strategic planning and will lead the integration of ION, said the addition of ION is a key milestone in Scripps' continuing evolution as it anticipates consumers' changing media habits. "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 to capitalize on our next opportunity," Knutson said.
Scripps bought Newsy for USD 35 million in 2018. Warren Buffett’s Berkshire Hathaway will make a USD 600 million preferred equity investment in Scripps to finance the transaction. "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."
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 to capitalize on our next opportunity.” Lisa Knutson Scripps Executive Vice President and Chief Financial Officer
