When WHO-TV and 20 other stations in its ownership group go on the auction block, Meredith Corp. will be taking a look.
In fact, the company is doing a quick evaluation of where the stations stand in terms of market share and location, said Art Slusark, vice president of corporate communications.
Television trade publication Broadcast & Cable reported last week that private equity firm Oak Hill Capital Partners planned to sell stations it acquired in 2007 and 2008 from the New York Times Co. and Fox.
Officials with WHO could not be reached for comment.
According to the story in Broadcast & Cable and subsequent reports in other trade publications, local television staffs have been informed of the decision to sell their properties.
WHO was among nine stations acquired by Oak Hill in 2007 from the New York Times for $575 million. The venture capital group, which includes Microsoft Corp. founder Bill Gates and Nike Inc. founder Phil Knight, created Local TV LLC to operate the stations. In 2008, Oak Hill acquired 12 stations from Fox.
The great majority of the operations rank among the top one or two stations in their markets. WHO is No. 2 in the Greater Des Moines market and it benefits from being in a state that receives millions of dollars in political advertising thanks to the Iowa caucuses and its position as a battleground state.
WQAD-TV in Moline also is among the stations owned by Oak Hill.
Slusark said several factors have converged to make this a good time to acquire well-performing properties. Among them: an improving economy, resolution of re-transmission fees that cable companies pay for the right to carry local stations, political advertising dollars are virtually unlimited thanks to the Citizens United ruling by the U.S. Supreme Court, and the fact that many of the properties were purchased at a premium.
Meredith has been in the running to purchase other broadcast properties in recent years, but determined that asking prices were too high.
Analysts estimated at the time of the New York Times deal with Oak Hill, that WHO and its sisters stations were generating about $45 million in annual cash flow and that the deal represented a cash-flow multiple of 12.7.
Cash flow multiples on current deals are running in the high-single to low-double digits, Slusark said.
The television stations fit several Meredith criteria, most are affiliated with the major networks – ABC, CBS, NBC and Fox – and many are markets serving state capitals or are in areas that are seeing immediate benefits from the economic recovery.
In addition, many of the stations, such as WHO, have a “strong viewership connection,” Slusark said.
“It is a struggle to change viewership,” he said. “We believe we can fix advertising issues.”
Meredith owns 13 television stations that operate under its Local Media Group umbrella. The division reported what the company described as “record performance” in the second quarter and first half of its 2013 fiscal year, with revenues increasing 32 percent to $111 million and operating profit up 65 percent to $45 million from the prior year.