Local TV station owner E.W. Scripps said it will pay $2.65 billion to acquire national broadcast network ION Media, with Warren Buffett’s Berkshire Hathaway putting $600 million into the deal.
Scripps will combine ION assets — notably its broadcast spectrum holdings — with its own brands like multiplatform news outlet Newsy and multicast networks such as Court TV and Bounce to create a national company. ION reaches 100 million homes through over-the-air and pay-TV.
Shares in Scripps soared more than 35% on the news during the opening minutes of trading Thursday, passing the $14 mark.
Berkshire Hathaway’s preferred equity investment in Scripps will also come with a warrant to purchase up to 23.1 million Class A shares, at an exercise price of $13 per share. For Berkshire, the deal represents its first media investment in some time. In January, it exited the local newspaper business, long a favorite of Buffett’s, after determining that it was no longer financially viable.
West Palm Beach, FL-based ION Media traces its roots to Pax TV in the 1990s. It rebranded to ION in 2007 and has mostly programmed syndicated fare, including crime procedurals, with its stations not equipped with news divisions. The acquisition announcement said ION’s average prime-time audience is fifth largest among all networks carried by cable operators.
ION owns stations in 62 markets and has 124 affiliates, reaching 96% of U.S. homes. Instead of negotiating retransmission consent fees, ION relies on federal government must-carry provisions, which ensures its programming is widely available.
Spectrum assets are key to the rollout of ATSC 3.0, a new set of broadcast standards that will imbue broadcasts with more interactive features and enhancements. The broadcast television business, beset by existential threats from streaming and other digital media in recent years, has coalesced around the new standards. Scripps CEO Adam Symson said Scripps will be the largest holder of broadcast spectrum after the transaction. The company is “poised to take an even greater leadership role in the development of future business models that leverage ATSC 3.0 and spectrum to benefit the American people,” he said.
“This evolution of Scripps’ national television networks business, through the combination of ION, the Katz networks and Newsy, repositions the company in the television landscape,” Symson said. “With its strong revenue growth, high margins and significant cash flow, ION will make Scripps a more powerful and durable media business with significant near-term benefit as well as long-term value. ION Media is a distribution double threat – carried on cable and satellite through must carry while also capitalizing on cord-cutting and the growth of free over-the-air broadcasting.”
Ted Weschler, the Berkshire Hathaway officer responsible for the investment, said Cincinnati-based Scripps’ long history was a key aspect of the deal. “As the media industry continues its rapid evolution, Berkshire Hathaway is fortunate to partner with this management team and the Scripps family, who have successfully anticipated the future of media for over a century,” Weschler said.