Gray TV to Buy Raycom in $3.65 Billion Deal

Gray Television has agreed to buy fellow television-station owner Raycom Media in a $3.65 billion deal that would create a company that reaches nearly a quarter of US TV households. Gray estimates it will be able to save $40 million in the first year after the deal closes by reducing station and corporate expenses. It also expects revenue to increase by $15 million, as Raycom’s contracts convert to Gray’s rates. If the Gray-Raycom deal is completed, the combined company would own 142 television stations in 92 US markets, reaching 24% of TV households and owning the third-largest number stations. Gray is buying Raycom for $3.65 billion in total proceeds, including $2.85 billion in cash, $650 million in preferred stock and 11.5 million shares of Gray stock, valued at $147.2 million June 22. Raycom is employee-owned. Gray’s shareholders would have 89% of the economic ownership of the company after the deal. The combined annual net revenue of both companies, averaged over a two-year basis, would have been about $2 billion. Gray has largely owned the leading stations in smaller and midsize markets across the US, while Raycom has focused more on operations in the South. To ease regulatory approval, Gray plans to sell television stations in all nine of the markets where both companies operate stations.