Gray Television Inc has withdrawn its offer to acquire larger peer Tegna Inc because of concerns about the impact of the coronavirus outbreak on U.S. regional TV station operators, people familiar with the matter said on Tuesday.
Gray had offered to buy Tegna for about $8.5 billion, including debt, Reuters reported earlier this month. After Gray’s stock tumbled on the news and concerns about the coronavirus pandemic’s financial impact became widespread, the Atlanta-based company decided this was not the time to pursue the transformative acquisition, one of the sources said.
Private equity firm Apollo Global Management Inc and media mogul Byron Allen, which also had made $20-per-share all-cash offers for Tegna, remain in contention to buy the company and deal negotiations are continuing, the sources said. Tegna has been engaging with bidders and allowing them to carry out due diligence, the sources added.
There is no certainty there will be a deal for Tegna, given the economic uncertainty brought about by the coronavirus crisis, the sources said, asking not to be identified because the matter is confidential.
Tegna, Gray, Apollo and Allen all declined to comment.
While the regional TV sector is benefiting from increased political advertising this year ahead of the U.S. presidential election in November, TV advertising budgets have been in decline as media consumption shifts to the internet and online streaming. This decline could accelerate should the coronavirus outbreak weigh on consumer spending and the appetite of advertisers to woo them.
Only 67% of U.S. households still have traditional pay-TV subscriptions, according to a PwC report published last year. The decline in traditional viewership has led to a wave of consolidation as companies compete for viewers.
Tegna, a spinoff of Gannett Co Inc’s broadcasting and digital arm, runs 62 television stations in 51 U.S. markets, and reaches 39% of television households in the United States.
Apollo’s Cox assets include 13 TV stations and 54 radio stations across 10 markets. Apollo also owns Northwest Broadcasting, which owns 20 TV stations.
Allen, who acquired the Weather Channel TV network for $300 million in 2018, owns 15 stations in smaller markets.
Standard General, a hedge fund that owns roughly 9.7% of Tegna, has been pushing the company to sell itself and is seeking to get directors on its board. Investment firms HG Vora Capital Management and Donerail Group have also been pushing for changes at Tegna.
Source: Reuters.com