Acquisitions and Dispositions | 12 Months Ended |
Dec. 31, 2014 |
Acquisitions And Dispositions [Abstract] | |
Acquisitions and Dispositions | 3. Acquisitions and Dispositions |
2014 Acquisitions |
Citadel |
On September 16, 2013, Nexstar entered into definitive agreements with Citadel to acquire 3 television stations in 3 markets along with the respective network affiliation agreements: WOI, the ABC affiliate in the Des Moines, Iowa market, WHBF, the CBS affiliate in the Quad Cities, Iowa market and KCAU, the ABC affiliate in the Sioux City, Iowa market. Nexstar acquired the assets of KCAU and WHBF and the outstanding equity of WOI for a total of $87.9 million in cash. In 2013, Nexstar made payments of $44.9 million to acquire the assets excluding FCC licenses and real property interests of KCAU and WHBF and $21.0 million as an upfront payment to acquire the outstanding equity of WOI, funded by a combination of borrowings under Nexstar’s revolving credit facility and cash on hand. Nexstar also entered into TBAs with these stations, effective September 16, 2013, to provide programming and sales services to these stations during the pendency of the FCC approval of the acquisitions. On March 5, 2014, Nexstar received approval from the FCC to purchase the remaining assets of KCAU and WHBF and to acquire the outstanding equity of WOI. On March 13, 2014, Nexstar completed the acquisition of FCC licenses and real property interests of KCAU and WHBF and the outstanding equity of WOI and paid the remaining purchase price of $22.0 million, funded by cash on hand. In addition, Nexstar finalized the fair values of the assets acquired and recorded a decrease in goodwill of $19 thousand. The TBAs entered into with KCAU, WHBF and WOI were also terminated as of this date. The acquisitions allow Nexstar entrance into 3 new markets. Transaction costs relating to this acquisition, including legal and professional fees of $0.1 million and $0.4 million, were expensed as incurred during the years ended December 31, 2014 and 2013, respectively. |
The fair values of the assets acquired and liabilities consolidated upon becoming a VIE are as follows (in thousands): |
|
Broadcast rights | | $ | 269 | | | | | | | | | |
Prepaid expenses and other current assets | | | 305 | | | | | | | | | |
Property and equipment | | | 10,613 | | | | | | | | | |
FCC licenses | | | 24,700 | | | | | | | | | |
Network affiliation agreements | | | 26,129 | | | | | | | | | |
Other intangible assets | | | 3,398 | | | | | | | | | |
Goodwill | | | 30,195 | | | | | | | | | |
Other assets | | | 1,807 | | | | | | | | | |
Total assets acquired | | | 97,416 | | | | | | | | | |
Less: Broadcast rights payable | | | (269 | ) | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (397 | ) | | | | | | | | |
Less: Deferred tax liabilities | | | (8,801 | ) | | | | | | | | |
Net assets acquired | | $ | 87,949 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The intangible assets related to the network affiliation agreements are amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of one year. |
The $10.7 million goodwill, $14.7 million FCC licenses and $15.1 million network affiliation agreements attributable to KCAU and WHBF are deductible for tax purposes. WOI’s goodwill, FCC license and network affiliation agreements of $19.5 million, $10.0 million and $11.0 million, respectively, will not be deductible for tax purposes. |
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The acquired stations’ net revenue of $30.5 million and net income of $8.2 million during the year ended December 31, 2014 and net revenue of $6.9 million and net income of $0.8 million from September 16, 2013 to December 31, 2013 were included in the accompanying Consolidated Statements of Operations as a consolidated VIE (See Note 2). |
Internet Broadcasting Systems |
Effective April 1, 2014, Nexstar acquired the assets of Internet Broadcasting Systems, Inc. (“IBS”), a digital publishing platform and digital agency services provider, for a total purchase price of $18.8 million, funded by cash on hand. The acquisition broadens Nexstar’s digital media portfolio with technologies and offerings that are complementary to Nexstar’s digital businesses and multi-screen strategies. Transaction costs relating to this acquisition, including legal and professional fees of $0.1 million, were expensed as incurred during the year ended December 31, 2014. Additionally, employment charges of $0.5 million were incurred and included in the Consolidated Statements of Operations. |
The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands): |
|
Accounts receivable | | $ | 631 | | | | | | | | | |
Prepaid expenses and other current assets | | | 154 | | | | | | | | | |
Property and equipment | | | 2,851 | | | | | | | | | |
Software and other intangible assets | | | 10,853 | | | | | | | | | |
Goodwill | | | 6,396 | | | | | | | | | |
Total assets acquired | | | 20,885 | | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (1,119 | ) | | | | | | | | |
Less: Deferred revenue | | | (976 | ) | | | | | | | | |
Net assets acquired | | $ | 18,790 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in operating costs. Goodwill is deductible for tax purposes. Software and other intangible assets are amortized over an estimated weighted average useful life of five years. |
IBS’ net revenue of $15.8 million and net loss of $0.9 million for the period April 1, 2014 to December 31, 2014 have been included in the accompanying Consolidated Statements of Operations. |
ETG |
On May 15, 2014, Nexstar acquired the outstanding equity of Enterprise Technology Group, Inc. (“ETG”), a digital content management firm that offers solutions for media companies to build a presence on the web and in the mobile content sector, for a total purchase price of $7.2 million, funded by cash on hand. The acquisition broadens Nexstar’s digital media portfolio with technologies and offerings that are complementary to Nexstar’s digital businesses and multi-screen strategies. No significant transaction costs relating to this acquisition were incurred during the year ended December 31, 2014. |
The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands): |
|
Cash | | $ | 433 | | | | | | | | | |
Accounts receivable | | | 210 | | | | | | | | | |
Prepaid expenses and other current assets | | | 84 | | | | | | | | | |
Property and equipment | | | 75 | | | | | | | | | |
Software and other intangible assets | | | 4,329 | | | | | | | | | |
Goodwill | | | 4,432 | | | | | | | | | |
Total assets acquired | | | 9,563 | | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (368 | ) | | | | | | | | |
Less: Deferred revenue | | | (219 | ) | | | | | | | | |
Less: Deferred tax liabilities | | | (1,792 | ) | | | | | | | | |
Net assets acquired | | $ | 7,184 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in operating costs. Goodwill will not be deductible for tax purposes. Software and other intangible assets are amortized over an estimated weighted average useful life of five years. |
ETG’s net revenue of $3.0 million and net loss of $0.2 million for the period May 15, 2014 to December 31, 2014 have been included in the accompanying Consolidated Statements of Operations. |
Gray TV/Parker |
Effective June 13, 2014, Nexstar completed the acquisition of the outstanding equity of WMBB, the ABC affiliate in the Panama City, Florida market, KREX/KREG/KREY, the CBS affiliates and KGJT, the MyNetworkTV affiliate, all in the Grand Junction, Colorado market, from Gray TV for $34.5 million in cash, funded by a combination of proceeds from borrowings under Nexstar’s Term Loan A (See Note 7) and cash on hand. Both KREG and KREY operate as satellite stations of KREX. This acquisition allows Nexstar entrance into 2 new markets. Transaction costs relating to this acquisition, including legal and professional fees of $0.1 million, were expensed as incurred during the year ended December 31, 2014. |
The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands): |
|
Accounts receivable | | $ | 1,831 | | | | | | | | | |
Broadcast rights | | | 98 | | | | | | | | | |
Prepaid expenses and other current assets | | | 75 | | | | | | | | | |
Property and equipment | | | 12,513 | | | | | | | | | |
FCC licenses | | | 5,950 | | | | | | | | | |
Network affiliation agreements | | | 7,719 | | | | | | | | | |
Other intangible assets | | | 1,878 | | | | | | | | | |
Goodwill | | | 4,895 | | | | | | | | | |
Total assets acquired | | | 34,959 | | | | | | | | | |
Less: Broadcast rights payable | | | (98 | ) | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (361 | ) | | | | | | | | |
Net assets acquired | | $ | 34,500 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The goodwill and FCC licenses are deductible for tax purposes. The intangible assets related to the network affiliation agreements are amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of 1.5 years. |
The acquired stations’ net revenue of $9.8 million and net income of $3.9 million for the period June 13, 2014 to December 31, 2014 have been included in the accompanying Consolidated Statements of Operations. |
On December 18, 2013, Mission entered into a definitive agreement with Excalibur Broadcasting, LLC (“Excalibur”) to acquire Parker, the owner of television station KFQX, the FOX affiliate in the Grand Junction, Colorado market. The acquisition will allow Mission entrance into this market. The FCC has not granted consent to Mission’s acquisition of Parker from Excalibur. On May 27, 2014, Mission and Excalibur terminated their purchase agreement and Mission assumed Excalibur’s rights, title and interest in an existing purchase agreement to acquire Parker for $4.0 million in cash, subject to adjustments for working capital. In connection with this restructuring, Mission paid a deposit of $3.2 million on June 13, 2014. The acquisition is subject to FCC approval and other customary conditions and Mission is expecting it to close during 2015. Mission expects to fund the remaining purchase price through cash generated from operations prior to closing. No significant transaction costs were incurred in connection with this acquisition during the year ended December 31, 2014. |
Upon Nexstar’s acquisition of KREX, Nexstar assumed the contractual obligations under a TBA with Parker to perform certain sales and other services for KFQX. As discussed in Note 2, Nexstar became the primary beneficiary of the variable interests in Parker through the assumption of the TBA and has consolidated this station into its Consolidated Financial Statements beginning June 13, 2014. Nexstar has recorded the following estimated fair values of beginning assets and liabilities of the station (in thousands): |
|
FCC licenses of a consolidated VIE | | $ | 1,539 | | | | | | | | | |
Network affiliation agreements | | | 1,744 | | | | | | | | | |
Other intangible assets | | | 20 | | | | | | | | | |
Goodwill | | | 697 | | | | | | | | | |
Total assets of a consolidated VIE | | | 4,000 | | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (13 | ) | | | | | | | | |
Net assets of a consolidated VIE | | $ | 3,987 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. Mission will evaluate the tax deductibility of the values assigned to goodwill and FCC licenses upon completion of the acquisition. The intangible asset related to the network affiliation agreements is amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of 11 months. |
During the period from June 13, 2014 to December 31, 2014, Parker had no significant revenue or operating results. |
Grant |
On December 1, 2014, Nexstar completed the acquisition of the outstanding equity of privately-held Grant, the owner of 7 television stations in 4 markets, for $92.4 million in cash, from the Estate of Milton Grant. The stations, along with their respective network affiliation agreements, are WFXR, the FOX affiliate and WWCW, The CW affiliate, both serving the Roanoke, Virginia market, WZDX, the FOX affiliate in the Huntsville, Alabama market, KGCW, The CW affiliate and KLJB, the FOX affiliate, both in the Quad Cities, Iowa market and WLAX/WEUX, the FOX affiliates, in the La Crosse, Wisconsin market. WEUX operates as a satellite station of WLAX. |
A deposit of $8.5 million was paid by Nexstar in November 2013 upon signing the stock purchase agreement. Nexstar paid $83.1 million at closing funded by a combination of cash on hand and Nexstar’s Term Loan A (See Note 7). The remaining unpaid working capital adjustment of $0.8 million is included in accrued expenses of the consolidated balance sheet as of December 31, 2014. |
Simultaneous with Nexstar’s acquisition of Grant on December 1, 2014, Nexstar sold the assets of KLJB to Marshall for $15.3 million in cash, and entered into local service agreements to perform certain sales and other services for this station. Marshall funded the purchase price to Nexstar through its credit facility (See Note 7). |
As discussed in Note 2, Nexstar is the primary beneficiary of the variable interests in Marshall and has consolidated this entity into Nexstar’s Consolidated Financial Statements beginning December 1, 2014. Accordingly, all effects of the sale between Nexstar and Marshall have been eliminated in consolidation. |
The Grant acquisition allows Nexstar entrance into 3 new markets and creates duopolies in 3 markets. Transaction costs relating to this acquisition, including legal and professional fees of $0.3 million, were expensed as incurred during the year ended December 31, 2014. |
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The estimated fair values of the assets acquired and liabilities assumed in the Grant acquisition, including the assets and liabilities of KLJB, are as follows (in thousands): |
|
Cash | | $ | 1,834 | | | | | | | | | |
Accounts receivable | | | 7,708 | | | | | | | | | |
Broadcast rights | | | 9,213 | | | | | | | | | |
Prepaid expenses and other current assets | | | 157 | | | | | | | | | |
Property and equipment | | | 22,971 | | | | | | | | | |
FCC licenses | | | 25,531 | | | | | | | | | |
Network affiliation agreements | | | 27,614 | | | | | | | | | |
Other intangible assets | | | 3,101 | | | | | | | | | |
Goodwill | | | 42,038 | | | | | | | | | |
Other assets | | | 34 | | | | | | | | | |
Total assets acquired | | | 140,201 | | | | | | | | | |
Less: Broadcast rights payable | | | (10,337 | ) | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (4,160 | ) | | | | | | | | |
Less: Capital lease obligation | | | (4,446 | ) | | | | | | | | |
Less: Software agreement obligation | | | (562 | ) | | | | | | | | |
Less: Taxes payable | | | (6,618 | ) | | | | | | | | |
Less: Deferred tax liabilities | | | (21,665 | ) | | | | | | | | |
Net assets acquired | | $ | 92,413 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in operating costs. Goodwill will not be deductible for tax purposes. The intangible assets related to the network affiliation agreements are amortized over 15 years and other intangible assets are amortized over an estimated weighted average useful life of five months. |
The acquired stations’ net revenue of $3.6 million and net income of $0.3 million for the period December 1, 2014 to December 31, 2014 have been included in the accompanying Consolidated Statements of Operations. |
2012 and 2013 Acquisitions |
Newport/Inergize |
On December 1, 2012, Nexstar acquired the assets of 10 television stations listed below in 7 markets and Inergize Digital Media (“Inergize”), a digital media management entity that offers solutions for companies in building presence on the web and in the mobile arena, from Newport Television LLC and Newport Television License LLC for $225.0 million in cash, funded by Nexstar’s senior secured credit facility. The acquisition allows Nexstar entrance into these markets. The transaction costs relating to this acquisition, including legal, professional fees and travel, of $1.7 million, were expensed as incurred during the year ended December 31, 2012. |
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| | | | Primary | | | | | | | | |
Market | | Station | | Affiliation | | | | | | | | |
Salt Lake City, Utah | | KTVX | | ABC | | | | | | | | |
KUCW | The CW | | | | | | | | |
Memphis, Tennessee | | WPTY | | ABC | | | | | | | | |
WLMT | The CW | | | | | | | | |
Syracuse, New York | | WSYR | | ABC | | | | | | | | |
Binghamton, New York | | WBGH | | NBC | | | | | | | | |
WIVT | ABC | | | | | | | | |
Elmira, New York | | WETM | | NBC | | | | | | | | |
Jacksonville, Tennessee | | WJKT | | FOX | | | | | | | | |
Watertown, New York | | WWTI | | ABC | | | | | | | | |
The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands): |
|
Broadcast rights | | $ | 9,346 | | | | | | | | | |
Prepaid expenses and other current assets | | | 728 | | | | | | | | | |
Property and equipment | | | 44,314 | | | | | | | | | |
FCC licenses | | | 80,838 | | | | | | | | | |
Network affiliation agreements | | | 52,817 | | | | | | | | | |
Other intangible assets | | | 11,149 | | | | | | | | | |
Goodwill | | | 36,501 | | | | | | | | | |
Other assets | | | 1,015 | | | | | | | | | |
Total assets acquired | | | 236,708 | | | | | | | | | |
Less: Broadcast rights payable | | | (10,274 | ) | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (1,204 | ) | | | | | | | | |
Less: Deferred revenue | | | (216 | ) | | | | | | | | |
Less: Other liabilities | | | (2 | ) | | | | | | | | |
Net assets acquired | | $ | 225,012 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The goodwill and FCC licenses are deductible for tax purposes. The intangible asset related to the network affiliation agreement acquired will be amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of approximately 1.5 years. |
Newport/Inergize’s revenue of $8.0 million and net income of $0.5 million during the year ended December 31, 2012 have been included in the accompanying Consolidated Statements of Operations. |
KLRT/KASN (Newport) |
Effective January 1, 2013, Mission acquired the assets of KLRT, the FOX affiliate, and KASN, the CW affiliate, both in the Little Rock, Arkansas market, from Newport for $59.7 million in cash. Pursuant to the terms of the purchase agreement, Mission made an initial payment of $6.0 million against the purchase price on July 18, 2012. The remainder of the purchase price was funded by Mission through the proceeds of $60.0 million term loan under its senior secured credit facility. This acquisition allows Mission entrance into this market. The transaction costs relating to this acquisition, including legal and professional of $0.1 million, were expensed as incurred during the year ended December 31, 2012. No significant transaction costs were incurred in connection with this acquisition during the year ended December 31, 2013. |
The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands): |
|
Broadcast rights | | $ | 2,279 | | | | | | | | | |
Prepaid expenses and other current assets | | | 71 | | | | | | | | | |
Property and equipment | | | 11,153 | | | | | | | | | |
FCC licenses of consolidated VIEs | | | 16,827 | | | | | | | | | |
Network affiliation agreements | | | 17,002 | | | | | | | | | |
Other intangible assets | | | 2,511 | | | | | | | | | |
Goodwill | | | 12,727 | | | | | | | | | |
Other assets | | | 7 | | | | | | | | | |
Total assets acquired | | | 62,577 | | | | | | | | | |
Less: Broadcast rights payable | | | (2,492 | ) | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (386 | ) | | | | | | | | |
Net assets acquired | | $ | 59,699 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The goodwill and FCC licenses are deductible for tax purposes. The intangible asset related to the network affiliation agreements acquired is amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of one year. |
KLRT/KASN’s net revenue of $20.4 million and net income of $9.4 million during the year ended December 31, 2013 have been included in the accompanying Consolidated Statements of Operations. |
KGET/KKEY-LP/KGPE (Newport) |
Effective February 1, 2013, Nexstar acquired the assets of KGPE, the CBS affiliate, in the Fresno, California market, KGET, the NBC/The CW affiliate, and KKEY-LP, the low powered Telemundo affiliate, both in the Bakersfield, California market, from Newport for $35.4 million in cash, funded by cash on hand and includes a $3.5 million deposit paid by Nexstar upon signing the purchase agreement in November 2012. This acquisition allows Nexstar entrance into these markets. During the year ended December 31, 2013, the transaction costs relating to this acquisition, including legal and professional fees of $0.2 million were expensed as incurred. |
The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands): |
|
Broadcast rights | | $ | 72 | | | | | | | | | |
Prepaid expenses and other current assets | | | 351 | | | | | | | | | |
Property and equipment | | | 9,343 | | | | | | | | | |
FCC licenses | | | 14,318 | | | | | | | | | |
Network affiliation agreements | | | 9,307 | | | | | | | | | |
Other intangible assets | | | 1,310 | | | | | | | | | |
Goodwill | | | 1,077 | | | | | | | | | |
Total assets acquired | | | 35,778 | | | | | | | | | |
Less: Broadcast rights payable | | | (72 | ) | | | | | | | | |
Less: Deferred revenue | | | (57 | ) | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (196 | ) | | | | | | | | |
Net assets acquired | | $ | 35,453 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The goodwill and FCC licenses are deductible for tax purposes. The intangible asset related to the network affiliation agreements acquired is amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of 10 months. |
KGET/KKEY-LP/KGPE’s net revenue of $25.0 million and net income of $0.3 million for the period February 1, 2013 to December 31, 2013 have been included in the accompanying Consolidated Statements of Operations. |
KSEE |
Effective February 1, 2013, Nexstar entered into a definitive agreement to acquire the assets of KSEE, the NBC affiliate serving the Fresno, California market, and an unrelated network affiliation agreement from Granite for $26.5 million in cash. Pursuant to the asset purchase agreement, Nexstar made a payment of $20.0 million funded by cash on hand, to acquire the station’s assets excluding FCC license and certain transmission equipment. Nexstar also entered into a TBA for KSEE, effective February 1, 2013, to program most of KSEE’s broadcast time, sell its advertising time and retain the advertising revenue generated during the pendency of the FCC approval of the asset purchase. On April 17, 2013, Nexstar received approval from the FCC to purchase the remaining assets of KSEE. On May 31, 2013, Nexstar completed the acquisition of the FCC license and certain transmission equipment and paid the remaining purchase price of $6.5 million. Accordingly, the TBA was terminated as of this date. This acquisition allows Nexstar to operate a duopoly in this market. No significant transaction costs were incurred in connection with this acquisition during the year ended December 31, 2013. |
The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands): |
|
Prepaid expenses and other current assets | | $ | 140 | | | | | | | | | |
Property and equipment | | | 7,350 | | | | | | | | | |
FCC licenses | | | 7,385 | | | | | | | | | |
Network affiliation agreements | | | 7,870 | | | | | | | | | |
Other intangible assets | | | 107 | | | | | | | | | |
Goodwill | | | 3,838 | | | | | | | | | |
Total assets acquired | | | 26,690 | | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (194 | ) | | | | | | | | |
Net assets acquired | | $ | 26,496 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The goodwill and FCC licenses are deductible for tax purposes. The intangible asset related to the network affiliation agreements acquired is amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of 5 months. |
KSEE’s net revenue of $6.6 million and net income of $4.7 million for the period February 1, 2013 to December 31, 2013 have been included in the accompanying Consolidated Statements of Operations. |
WFFF/WVNY |
On March 1, 2013, Nexstar and Mission acquired the assets of WFFF, the FOX affiliate, and WVNY, the ABC affiliate, both in the Burlington-Plattsburgh, Vermont market, from Smith Media, LLC (“Smith Media”) for $16.6 million in cash, funded by a combination of Nexstar’s and Mission’s borrowings from their revolving credit facilities and cash on hand. The purchase price includes a $0.8 million deposit paid by Nexstar upon signing the purchase agreement in November 2012. This acquisition allows Nexstar and Mission entrance into this market. During the year ended December 31, 2013, the transaction costs relating to this acquisition, including legal and professional fees of $0.1 million were expensed as incurred. |
The fair values of the assets acquired and liabilities assumed in the acquisition are as follows (in thousands): |
|
Broadcast rights | | $ | 1,030 | | | | | | | | | |
Prepaid expenses and other current assets | | | 150 | | | | | | | | | |
Property and equipment | | | 7,100 | | | | | | | | | |
FCC licenses | | | 2,797 | | | | | | | | | |
FCC licenses of consolidated VIEs | | | 2,797 | | | | | | | | | |
Network affiliation agreements | | | 2,119 | | | | | | | | | |
Other intangible assets | | | 439 | | | | | | | | | |
Goodwill | | | 1,787 | | | | | | | | | |
Total assets acquired | | | 18,219 | | | | | | | | | |
Less: Broadcast rights payable | | | (1,145 | ) | | | | | | | | |
Less: Deferred revenue | | | (19 | ) | | | | | | | | |
Less: Accounts payable and accrued expenses | | | (504 | ) | | | | | | | | |
Net assets acquired | | $ | 16,551 | | | | | | | | | |
The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The goodwill and FCC licenses are deductible for tax purposes. The intangible asset related to the network affiliation agreements acquired is amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of 6 months. |
WFFF/WVNY’s net revenue of $10.1 million and net income of $1.8 million for the period March 1, 2013 to December 31, 2013 have been included in the accompanying Consolidated Statements of Operations. |
Future Acquisitions |
Stainless |
On September 13, 2013, Mission entered into a definitive agreement to acquire WICZ, the FOX affiliate, and WBPN-LP, the MyNetworkTV affiliate, both in the Binghamton, New York market, from Stainless Broadcasting, L.P. The acquisition will allow Mission entrance into this market. Under the terms of the purchase agreement, Mission will acquire the assets of WICZ and WBPN-LP for $15.3 million in cash, subject to adjustments for working capital. A deposit of $0.2 million was paid in September 2013 upon signing the agreement. The remaining purchase price is expected to be funded by Mission through borrowings under its existing credit facility and cash on hand. The acquisition is subject to FCC approval and other customary conditions and Mission expects it to close during 2015. The transaction costs relating to this acquisition, including legal and professional fees of $0.4 million, were expensed as incurred during the year ended December 31, 2014. |
CCA |
Effective January 1, 2015, Nexstar completed the acquisition of the outstanding equity of privately-held CCA and assumed CCA’s rights and obligations under its existing local service agreements with White Knight Broadcasting (“White Knight”) for a total consideration of $270.0 million in cash, subject to adjustments for working capital, from SP ComCorp LLC, NexPoint Credit Strategies Fund and Highland Floating Rate Opportunities Fund. CCA and White Knight, collectively, owned of 19 television stations in 10 markets. |
A deposit of $27.0 million was paid to CCA in April 2013 upon signing the stock purchase agreement. Nexstar paid the remaining purchase price at closing funded by a combination of cash on hand and borrowings under its senior secured credit facility (See Note 7). The transaction costs relating to the CCA transaction, including legal and professional fees of $0.7 million, were expensed as incurred during the year ended December 31, 2014. |
Simultaneous with Nexstar’s acquisition of CCA on January 1, 2015, Nexstar sold the assets of CCA stations KPEJ and KMSS to Marshall for $43.3 million in cash, and entered into local service agreements with Marshall to perform certain sales and other services for these stations. Marshall funded the purchase price to Nexstar through its credit facility (See Note 7). Additionally, Nexstar sold the assets of CCA station WEVV, the CBS and FOX affiliate serving the Evansville market for $26.9 million in cash, subject to adjustments for working capital. There is no relationship between Nexstar and Bayou City Broadcasting Evansville, Inc. (“BCB”) or their respective stations after the sale. |
The above transactions allow the Company entrance into 7 new markets and create duopolies in 6 markets. The stations impacted are as follows: |
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Market | | Market Rank | | Station | | Affiliation | | | | | | |
Nexstar: | | | | | | | | | | | | |
Harlingen-Weslaco-Brownsville-McAllen, TX | | 86 | | KVEO | | NBC/Estrella | | | | | | |
Waco-Temple-Bryan, TX | | 87 | | KWKT | | FOX/MyNetworkTV/ Estrella | | | | | | |
KYLE | FOX/MyNetworkTV/ Estrella | | | | | | |
El Paso, TX | | 91 | | KTSM | | NBC/Estrella | | | | | | |
Baton Rouge, LA | | 93 | | WGMB | | FOX | | | | | | |
WBRL-CD | The CW | | | | | | |
Tyler-Longview, TX | | 108 | | KETK | | NBC/Estrella | | | | | | |
Lafayette, LA | | 124 | | KADN | | FOX | | | | | | |
KLAF-LD | MyNetworkTV | | | | | | |
Alexandria, LA | | 179 | | WNTZ | | FOX/MyNetworkTV | | | | | | |
Marshall: | | | | | | | | | | | | |
Shreveport, LA | | 83 | | KMSS | | FOX | | | | | | |
Odessa-Midland, TX | | 146 | | KPEJ | | FOX/Estrella | | | | | | |
White Knight: | | | | | | | | | | | | |
Baton Rouge, LA | | 93 | | WVLA | | NBC | | | | | | |
KZUP-CD | RTV | | | | | | |
Tyler-Longview, TX | | 108 | | KFXK | | FOX | | | | | | |
KFXL-LD | FOX | | | | | | |
KLPN-LD | MyNetworkTV | | | | | | |
Shreveport, LA | | 83 | | KSHV | | MyNetworkTV | | | | | | |
KASW |
On October 21, 2014, Nexstar entered into a definitive agreement to acquire the assets of KASW, the CW affiliate in the Phoenix, Arizona market from Meredith Corporation and SagamoreHill of Phoenix, LLC for $68.0 million in cash, subject to adjustments for working capital. The acquisition was completed on January 30, 2015 and allows Nexstar entrance into this market. The purchase price was funded through Nexstar’s 6.125% Notes and borrowings under Nexstar’s existing credit facility (See Note 7). No significant transaction costs relating to this acquisition were incurred during the year ended December 31, 2014. |
KCWI |
On October 24, 2014, Nexstar entered into a definitive agreement to acquire the assets of KCWI, the CW affiliate in the Des Moines-Ames, Iowa market from Pappas Telecasting of Iowa, LLC for $3.5 million in cash, subject to adjustments for working capital. A deposit of $0.2 million was paid upon signing the purchase agreement. The remaining purchase price is expected to be funded through cash on hand. The acquisition is subject to bankruptcy approval and other customary conditions and Nexstar expects it to close during the first quarter of 2015. No significant transaction costs relating to this acquisition were incurred during the year ended December 31, 2014. |
KLAS |
On November 21, 2014, Nexstar entered into a definitive agreement to acquire the outstanding equity of KLAS, LLC, the owner of television station KLAS, the CBS affiliate serving the Las Vegas, Nevada market for $145.0 million in cash, subject to adjustments for working capital, from Landmark Television, LLC and Landmark Media Enterprises, LLC. The acquisition was completed on February 13, 2015 and allows Nexstar entrance into this market. The purchase price was funded through Nexstar’s 6.125% Notes and borrowings under Nexstar’s existing credit facility (See Note 7). Transaction costs relating to this acquisition, including legal and professional fees of $0.1 million, were expensed as incurred during the year ended December 31, 2014. |
Yashi |
On February 2, 2015, Nexstar acquired the outstanding equity of Yashi, a local digital video advertising and targeted programmatic technology platform for $33.0 million in cash, subject to adjustments for working capital. The acquisition is expected to broaden Nexstar’s digital media portfolio with technologies and offerings that are complementary to Nexstar’s digital businesses and multi-screen strategies. The purchase price was funded through Nexstar’s 6.125% Notes and borrowings under Nexstar’s existing credit facility (See Note 7). |
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Due to the timing of the completion of acquisitions of KLAS, Yashi, KASW and CCA as described above, certain disclosures, including the allocation of the purchase price, have been omitted because the initial accounting for these business combinations was incomplete as of the filing date. |
Unaudited Pro Forma Information |
The Gray TV, ETG and Citadel acquisitions in 2014 and the Smith Media and Granite acquisitions in 2013 are immaterial, both individually and in aggregate. Therefore, pro forma information has not been provided for these acquisitions. |
As discussed above, Nexstar and Mission acquired certain television stations from Newport during 2013 and 2012. As the stations were acquired from the same entity, the Company considered these acquisitions as a single transaction for purposes of assessing materiality and presenting pro forma information. The following table sets forth unaudited pro forma results of operations, as if the IBS and Grant acquisitions, and the related VIE consolidation, occurred at the beginning of 2013 and the Newport acquisitions occurred at the beginning of 2012, along with transactions necessary to finance the acquisitions (in thousands, except per share data): |
|
| | Unaudited | |
| | 2014 | | | 2013 | | | 2012 | |
Net revenue | | $ | 677,105 | | | $ | 565,873 | | | $ | 498,859 | |
Income before income taxes | | | 115,191 | | | | 3,111 | | | | 54,253 | |
Net income (loss) | | | 67,663 | | | | (95 | ) | | | 188,079 | |
Net income (loss) per common share attributable to Nexstar - basic | | $ | 2.16 | | | $ | (0.02 | ) | | $ | 6.5 | |
Net income (loss) per common share attributable to Nexstar - diluted | | $ | 2.08 | | | $ | (0.02 | ) | | $ | 6.12 | |
The above selected unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of results of operations in future periods or results that would have been achieved had the Company owned the acquired stations during the specified periods. |
Beaumont Station Sale |
On December 1, 2012, Nexstar sold the net assets of KBTV, its FOX and Bounce TV affiliate in Beaumont-Port Arthur, Texas, to Deerfield Media (Port Arthur), Inc. and San Antonio Television, LLC for $13.9 million, net of $0.1 million working capital sold. Proceeds of the sale were used to repay debt obligations and for general corporate purposes. Nexstar recognized a $5.1 million gain on disposal of KBTV, net of $3.1 million income tax expense presented as discontinued operations. The operating results of KBTV, comprising net revenue and total operating expenses of $4.1 million of $4.0 million, respectively, for the year ended December 31, 2012, have not been presented as discontinued operations based on materiality for this period. |