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Merged TV group with 14 stations, 11.6% coverage is valued at $1.8 billion
t's only Hearst Corp.'s second TV station buy in 11 years, but it's a doozy: In acquiring Argyle Television Inc. last week, Hearst doubled its TV station holdings and created a new TV company valued at $1.8 billion.
Argyle's stations themselves are valued at about $525 million, sources say. Hearst effectively paid 3.9 times Argyle's 1996 earnings. Brokers say that multiple sounds high, but fair. "They're good properties," says TV broker Brian Cobb, of Media Venture Partners: "It's a good matchup." But, he notes, the deal gives "new meaning [to the term] `geographic diversity.' "
Hearst-Argyle Television Inc. will be based in New York and will own 14 TV stations and three satellites. It will operate a 15th under an LMA, for a total TV household reach of 11.6%. The new company's goal is to reach 20% in 3-5 years, says Argyle Chairman Bob Marbut, who will be chairman/co-CEO of the new company. That's the percentage needed "to really be a player with the networks, with the programers, with everybody," he says.
To get there, Argyle and Hearst knew they had to merge. "The bottom line is both of these companies were looking for the best opportunities to be a consolidator," says Hearst Corp. President Frank Bennack Jr. "We came to where all broadcasters come: Do you go up in size or do you exit?"
San Antonio-based Argyle has been asking that question since last August, when it said it was looking to make its six TVs and three satellites part of a larger group. Hearst has been scouting stations for years, but its only...