Political Ad Spending Spurs Local TV Mergers

A period of consolidation is under way in local television — and with it, a renewed debate about the implications of merger and acquisition activity on the industry.

A torrent of deals began in September when the Sinclair Broadcast Group bought seven local stations from the Four Points Media Group for $200 million, and it continued in October when the E. W. Scripps Company bought nine stations from McGraw-Hill for $212 million. Last week, in the single biggest television station acquisition in four years, Sinclair bought eight stations owned by Freedom Communications for $385 million. Other groups of stations are believed to be on the market now, further signifying that the broadcast business is becoming more attractive to buyers after several painful years. Analysts say private equity firms that bought into the business years ago — like Cerberus Capital Management, which founded the holding company Four Points in 2007 — are ready to sell.

“Political hot spots have become a key criteria in the selection of acquisition targeting,” said Steve Ridge, the president of the media strategy group at Frank N. Magid Associates, an adviser to local stations. In some medium-size markets — like Des Moines, where the first caucus will be held in January — “the infusion literally changes the balance sheet,” he said.