Meredith Corp., the media company that publishes Better Homes and Gardens and Family Circle, agreed to buy television stations from Gannett Co. for $407.5 million, extending its push into broadcasting.
The stations, part of Gannett’s previously announced acquisition of Belo Corp., are located in Phoenix and St. Louis, Meredith said today in a statement. Gannett, working with a company called Sander Media LLC, agreed to divest some of the assets from that deal to comply with regulatory ownership rules.
For Meredith, the transaction expands its foothold in television, helping decrease its reliance on print media. The stations are expected to generate $105 million to $115 million a year in revenue after the purchase is completed, boosting earnings by 16 cents to 18 cents a share, Meredith said.
“These stations are terrific additions to our group,” Paul Karpowicz, president of Meredith’s local media group, said in the statement. “The markets are growing and they are located in states with significant political advertising.”
Meredith shares rose 4.8 percent to $51.16 at the close in New York, marking the biggest one-day gain in more than six months. The stock has climbed 49 percent this year.
The move follows Meredith’s failed deal with Time Warner Inc.’s Time Inc. magazines earlier this year. The two companies had discussed a transaction that would pair Time Inc.’s lifestyle and entertainment magazines with Meredith’s lineup, creating a new publisher of women-oriented titles.
As part of today’s transaction, Meredith will acquire KTVK, an independent station in Phoenix, and KMOV, a CBS affiliate in St. Louis. Another station in Phoenix -- KASW, a CBS affiliate - - will be acquired by SagamoreHill of Phoenix LLC. That will allow the deal to meet Federal Communications Commission rules, which restrict the number of stations companies can own in the same market. Meredith will have a service agreement with KASW.
The company already owns KPHO in Phoenix and KCTV in Kansas City, so the new stations will complement its lineup, Meredith said.
Gannett -- owner of 82 U.S. daily newspapers, including USA Today -- won U.S. antitrust approval last week for its $1.5 billion Belo purchase, which was originally announced in June. As part of a settlement with the Justice Department, Gannett agreed to sell the St. Louis station. It’s also transferring other stations to comply with FCC ownership rules.
TV advertising has held up better than print, spurring purchases of stations. In addition to the deals by Meredith and Gannett, Tribune Co. agreed in July to buy Local TV Holdings LLC’s 19 TV stations for $2.73 billion.