Gray Raycom

In the latest merger in the fast-consolidating television business, Gray Television is buying Raycom Media in a $3.65 billion deal that will create the third largest TV group based on number of stations. Under the terms of the merger, Gray will pay $2.85 billion in cash, $650 million in preferred stock and 11.5 million shares of Gray stock.

The combined company, to be known as Gray Television, will own 142 full-power television stations in 92 markets, reaching 24% of U.S. TV households. The merged company will own stations in markets ranging in size from Tampa-Sarasota, Cleveland, and Charlotte to small markets like Ottumwa, Fairbanks, Presque Isle and North Platte.

The companies have complementary station portfolios with overlap in only nine markets. To help gain regulatory approval, Gray says it will spin off stations in each of the overlap markets.

Gray was briefly in the radio business. In 2016 it acquired the broadcast assets of Schurz Communications for $415.3 million but immediately spun off the Schurz radio division in separate deals to Mid-West Family Broadcast Group, Neuhoff Communications and the HomeSlice Group.

Raycom Media owns a pair of radio stations: Spanish adult hits “102.9 Mundo FM” KEYU-FM in the Amarillo, TX market and regional Mexican “La Ley 104.7” KTXC in the Odessa-Midland, TX market.

The deal also encompasses several Raycom businesses, including various production and marketing companies that specialize in sports, entertainment and automotive. Raycom says it will sell or spin off Community Newspaper Holdings, which owns 100 titles in 23 states, as well as digital ad platform PureCars.

The deal comes as Sinclair Broadcast Group continues to work to secure regulatory approval for its pending $3.9 million purchase of Tribune Media, which would create the largest local TV group in the country.

After closing, Raycom president and CEO Pat LaPlatney and Gray chairman, president and CEO Hilton Howell, Jr., will become co-CEOs of the merged company.

The transaction has been approved unanimously by the boards of both companies and by Raycom shareholders. No Gray shareholder vote will be required. Gray shareholders will own 89% of the combined company. Closing is expected in the fourth quarter of 2018.

“Together, this new portfolio of leading local media outlets will excel at what they do best, which is to provide the local news that local communities trust, the entertainment and sports content that viewers crave, and the incredible reach that advertisers demand,” Howell said.

Added LaPlatney, “Together, we will be a stronger, more impactful force for our audiences, advertisers, and communities.”