Gray Television Inc. has bossed up and put up the big bucks to become owner of privately held rival broadcaster and former owner, Raycom Media Inc. This consolidation move represents the conglomerates inclination to leverage broadcast networks, which supply the bulk of their programming and the distributors that host their channels.
This maneuever will save allow Gray to save $40 million in its first year following the deal through the reduction of corporate expenses. Gray also expects to profit an additional $15M as Raycom’s contracts will convert into the rates that Gray owns.
By owning more stations Gray will be able to generate more revenue from relative cable and satellite providers who pay for the right to carry their signals.
The Gray-Raycom merger is the second television megadeal in a year, following Sinclair Broadcast Group Inc.’s agreement to buy Tribune Media Co. for $3.9 billion.
The combined Gray-Com will own 142 stations in 92 markets, making it the third-largest station owner in the country. Gray is acquiring stations in markets as small as Ottumwa, Iowa, and as large as Cleveland, Ohio, where it will own the CBS affiliate that airs NFL games, the NCAA March Madness tournament and The Masters golf tournament.