Sinclair Broadcast Group Inc.'s shopping spree continued Thursday with the announcement of a $373.3 million deal that extends its television reach to a third of U.S. viewing households.
Sinclair will gain 20 additional stations in eight markets by acquiring Seattle-based Fisher Communications Inc.
The purchase extends Sinclair's push into new areas, giving the Hunt Valley television station owner access to key markets such as Seattle and Portland, Sinclair CEO David Smith said.
"Fisher is a respected company with a long history in the broadcast space," Smith said during a conference call with analysts.
News of the planned merger sent the company's shares up 8.5 percent to close at $23.69.
The deal continues the company's rapid pace of acquisitions this year. In late February, Sinclair announced plans to buy four television stations from Cox Media Group for $99 million. Just days later, it reached a deal to buy 18 TV stations owned by Barrington Broadcasting Group for $370 million.
The recent spree is part of a strategy for Sinclair to expand its reach into small TV markets. In February, the broadcaster launched a new operating unit, Chesapeake TV, to run the Cox stations and other small stations it acquired.
The latest deals come after Sinclair added 30 TV stations in mid-sized markets in 18 months before February.
After the recently announced acquisitions close, Sinclair would own, operate or provide programming services for 134 stations in 69 markets, reaching 33.7 percent of all television households in the country. Those stations would include affiliates of all the major networks — 29 Fox, 24 CBS, 19 ABC and 14 NBC stations.
Under the latest deal, Fisher shareholders would receive $41 cash for each share of common stock, a 44 percent premium to the closing price of Fisher shares Jan. 9, the last trading day before the company announced it would review strategic alternatives.
Fisher owns and operates 13 full-power television stations and seven low-power television stations in the western United States, plus three Seattle radio stations. It also manages a fourth radio station in Seattle. Founded in 1910, the company has a history of operating television and radio stations in the Northwest with a focus on local news, Smith said.
In a Wells Fargo report Thursday, Marci Ryvicker, a senior analyst, called the deal positive for the broadcast sector and for Sinclair.
But during a conference call with analysts, Ryvicker questioned whether Sinclair's acquisitions would soon be limited by Federal Communications Commission rules saying a single owner's group of stations cannot reach more than 39 percent of all TV households.
"Now that [stations] cover 34 percent of the country, how much more can you do?" she asked.
"We can do a lot more," responded Smith, explaining that the percentage of household coverage, as calculated by the FCC, would be far below 34 percent because the FCC counts UHF stations, or Ultra High Frequency, as half of a non-UHF station.
Colleen B. Brown, Fisher's president and CEO, said in a statement she expects Sinclair's scale and resources as the largest independent TV broadcaster in the country will help the Fisher stations grow.
The deal, expected to close in the third quarter, requires FCC approval as well as antitrust clearance and the approval of two-thirds of Fisher's outstanding shares.
Sinclair expects to finance the purchase price through cash on hand, a bank loan or by accessing the capital markets. Fisher has no long-term debt and is expected to have approximately $20 million to $25 million of working capital when the deal closes.