Atlanta company buys local TV stations
Atlanta-based Gray Television will own two of the four Grand Junction television stations affiliated with a major network after a deal worth more than $342 million closes sometime before June 30, 2014.
Excalibur Broadcasting, managed by former Gray Television regional vice president Don Ray, will own the other two.
As a result of a transaction announced Wednesday, Gray would own NBC affiliate KKCO and CBS affiliate KREX and Excalibur would own ABC affiliate KJCT and Fox affiliate KFQX.
Both Ray and Gray are part-owners of Excalibur, Ray said.
Under the deal announced Wednesday, Gray will pay Hoak Media $335 million cash for KREX, KREY, KREG and 12 other stations in six markets, Gray President and CEO Hilton H. Howell said.
Excalibur will pay Hoak and Parker Broadcasting $7.5 million cash for Grand Junction Fox affiliate KFQX and five other television stations in five markets, Ray said.
Gray already owns Grand Junction NBC affiliate KKCO, Howell said.
Together, Gray and Excalibur own and operate ABC affiliate KJCT. The two companies paid a combined $12 million cash for KJCT in a deal that closed Oct. 31.
Excalibur bought KKCO’s broadcast license for $3 million. Gray bought all of KKCO’s non-license assets for $9 million, Gray officials said.
Ownership of the four Grand Junction TV stations by two companies will be short-lived. Federal regulations limit the number of stations a single company can own in one market, Ray said.
Federal rules require Gray and Excalibur to sell or trade away the Grand Junction stations that are part of the transaction announced Wednesday before the deal can be approved, Ray said.
“The Federal Communications Commission only allows you to control so many stations in a market, and so that’s why you have Excalibur,” Ray said.
“Just about everybody who is trying to grow in the business and stay in broadcasting and invest in broadcasting is setting up these arrangements so they can operate more stations,” he said.
Under an arrangement between the two companies, Excalibur acts as a holding company for broadcast licenses and enters into contracts with Gray to provide back office, engineering and sales support for television stations Excalibur owns, Ray said.
“Excalibur is not set up to run the stations or have a back office to handle everything that has to be done with a broadcast group,” he said.
As part of the agreement, Gray can produce 25 hours of programming for Excalibur stations, including news, Ray said.
In Grand Junction, that means Gray’s NBC affiliate KKCO could provide news programming to Excalibur’s ABC affiliate KJCT.
Howell declined to comment on whether the two stations shared news resources and referred the question to Robert Smith, a Gray senior vice president, who did not immediately return a telephone call requesting comment.
But the evidence of shared news content between KJCT and KKCO is clear since the previous deal. One weekend newscast has disappeared, and website content among the two stations is virtually identical and presumably centralized.
Upon completion of all transactions, Gray will own and/or operate television stations in 39 markets with 123 distinct channels, Gray officials said in a news release.
The transactions will immediately provide “significant free cash flow” to Gray, including $5 million in operational savings, officials said.