Sinclair Broadcast Group tried and failed to steal Belo Corp from the clutches of Gannett Co., leaving Gray Television Inc. and Lin LLC as targets for the largest U.S. TV station owner.
Bloomberg reports that Sinclair twice tried to top Gannett’s offer for Belo in the days before the shareholder vote, said people familiar with the matter, who asked not to be named because the process was private. Sinclair first sought to assemble a deal with various Belo shareholders, and then attempted to put together an offer with private-equity firm CVC Capital Partners Ltd., the people said. Neither effort led to a bid, they said, and Belo shareholders approved Gannett’s $1.5 billion offer on Sept. 25.
After missing out on Belo’s 20 TV stations, Hunt Valley, Maryland-based Sinclair may have to settle for alternatives. Gray, Lin and Raycom Media Inc. may be potential targets, said Paul Sweeney, a Bloomberg Industries analyst. In two years, Sinclair has announced $2.8 billion of deals as stations negotiate higher fees from cable systems. U.S. TV and broadcast deals have reached $8.7 billion this year, the most since 2007, according to data compiled by Bloomberg.
Sinclair was “one of the first in this wave of consolidation, and they’ve been pretty aggressive,” Barry Lucas, senior vice president of research at Rye, New York-based Gabelli & Co., said in a phone interview. “There’s enough fertile ground out there that Sinclair could find additional opportunity.”
Gabelli’s affiliate Gamco Investors Inc., which manages about $40 billion, holds stakes in Sinclair, Belo, Lin and Gray.
Sinclair Chief Financial Officer David Amy contacted large Belo shareholders, mostly hedge funds and arbitrage funds, on Sept. 19 to buy their Belo shares or to partner with them as part of the takeover effort, said one of the people. The Belo holders had for several weeks pressed to find another buyer willing to make a higher bid, and an offer was close to being arranged, said this person. The effort fell apart when one large Belo shareholder backed out, the person said.
Sinclair then tried to partner with London-based CVC on a bid that would have valued Belo at $15 a share, two of the people said, topping Gannett’s bid of $13.75. That arrangement also fell apart just before Belo investors voted on the Gannett offer, they said.
Belo was never formally contacted by Sinclair about a bid, one of the people said.
Sinclair’s Amy declined to comment on whether the company attempted to put together a competing bid for Belo. Paul Fry, a spokesman for Belo, declined to comment on the bidding process. Representatives for CVC and Gannett didn’t immediately respond to requests for comment.