Allbritton Communications of Rosslyn on Monday said it will sell eight television properties, includingWJLA and NewsChannel 8, to Sinclair Broadcast Group for $985 million, a blockbuster deal that ends a 40-year era in Washington media.
The nearly billion-dollar deal is the latest in a series of big media acquisitions to pounce on the increasing value of broadcast television properties. Sinclair, the largest independent owner of television stations, is paying far more than the $300 million some analysts had expected the stations to yield.
The deal also marks the end of a long chapter in the Washington media dynasty started by Joe L. Allbritton, who died in December. The company is now run by his son, Robert Allbritton, 44, who is exiting the television business his father built around its crown jewel, WJLA, known as ABC7. The Allbritton company, which once included television stations, newspapers and Riggs Bank, is being converted into a new media company building on the success of Politico, a political news Web site and newspaper launched in 2007.
“The son knows to get out at the top of the market,” said Bill Regardie, publisher of the eponymous Washington business magazine during the 1980s and 90s. “It doesn’t matter what he does with the money. He is sitting on $500 million,” after accounting for the $455 million in debt held by the television properties.
Under the deal, Sinclair will acquire eight Allbritton properties, which cover 4.9 percent of U.S. television households. In addition to WJLA, the acquisition includes stations in Roanoke/Lynchburg, Va.; Harrisburg, Pa.; Little Rock; Birmingham/Tuscaloosa/Anniston, Ala.; Tulsa; and Charleston, S.C. It also includes Allbritton’s NewsChannel 8 — Washington’s 24-hour local cable and satellite news station.
“Allbritton didn’t want to double or triple his bet on TV,” said Larry Patrick of Patrick Communications in Elkridge, Md. “Prices were strong, so he got out. He realized deep down that Politico is a unique and interesting concept.”
It follows several big-ticket media deals for local television stations. The Tribune Co. this month agreed to purchase 19 stations from Local TV Holdings for $2.7 billion, and in June, Gannett agreed to purchase 20 stations from Belo as part of a $2.2 billion deal.
“The TV industry is going through this massive consolidation. It has only picked up steam this year,” Patrick said.
The Allbritton TV group generated $214 million in revenue last year and $28.9 million in profit, according to its annual report. That was a big improvement from a year earlier, but the gains came mostly from WJLA and two smaller stations — WSET in Roanoke and WHTM in Harrisburg, Pa. — that reaped a bounty from a cyclical influx of political ads.
WJLA and NewsChannel 8 accounted for about half of the group’s revenue over the past three years, according to the annual report.
WJLA, one of the most widely-watched stations in the region, has made a significant investment in boosting its news ratings during the past decade, including hiring big names such as Leon Harris, Gordon Peterson, Maureen Bunyan and popular weatherman Bob Ryan and Doug Hill, Patrick said.
“The value of that company has gone up tremendously in the past five or six years,” Patrick said. “Everybody in TV realizes you have to get much, much bigger or you have to get out.”
The deal, which must be approved by the Federal Communications Commission, is expected to close in the fourth quarter of this year.
Sinclair did not immediately respond to telephone calls seeking comment.
Allbritton announced its plans to get out of the television business in May, saying it would use the proceeds to concentrate on its Internet strategy and Politico.
The cash generated by a sale could help Allbritton expand its Politico operations, which include more than 230 employees. Robert Allbritton “wants to do some more investment in Politico. He has other ventures in mind,” said Jerry Fritz, Allbritton senior vice president for legal and strategic affairs.
Television broadcast stations were high-margin cash cows for decades, but have been losing viewers as cable, satellite and the Internet siphon their audience. Local TV newscasts, which can generate more than a third of a station’s revenues, also have suffered significantly.
Media analyst Christopher Miller said most broadcast stations still get higher ratings than most cable stations. Broadcast stations also have received a boost in recent years from the “retransmission fees” they collect from cable companies that carry their programming, he said.
“Retransmission is going to continue to grow,” Miller said. Under its existing contracts with cable companies, Sinclair may be able to demand higher retransmission fees than Allbritton for the stations covered under the deal, he said.
Sinclair, which has a history of promoting conservative politics, said it will sell the license and “certain related assets” of its existing stations that serve Birmingham, Ala., Harrisburg, Pa., and Charleston, S.C., in order to comply with the FCC’s ownership rules.
The company’s stock rose about 1 percent to $30 a share Monday.