CBS Corp., owner of the most-watched U.S. television network, agreed to renew affiliation agreements for 12 stations owned by Lin Media LLC, helping the local-TV chain cement the terms of its takeover by Media General Inc.
The deal comes after tough negotiations between CBS and Lin, which owns WISH-TV Channel 8 in Indianapolis. In the end, CBS opted to pull its affiliation with WISH and strike a deal with local station WTTV-TV Channel 4, owned by Chicago-based Tribune Broadcasting.
Media experts interpreted CBS's move as a hardball tactic to prove to affiliates nationwide that it’s serious about scooping up a bigger chunk of “retransmission consent” fees—the money TV stations get from cable and satellite providers for the right to carry their signals.
The new deal between Lin and CBS includes renewals for channels in 10 U.S. markets including KRQE in Albuquerque, New Mexico; KREZ-TV in Durango, Colorado; and WIAT in Birmingham, Alabama, the companies said in a statement Thursday. Financial terms weren’t disclosed.
Earlier this month, Media General cut the price it’s paying to acquire Lin by $110 million after CBS broke off ties with WISH.
Media General, backed by Warren Buffett and Mario Gabelli, agreed to acquire Austin, Texas-based Lin in March for about $1.6 billion in cash and stock. The revised accord lowered the stock portion of that original deal. Thursday's agreement with CBS should help address concern the price could be lowered further, said Marci Ryvicker, an analyst at Wells Fargo & Co.
“We think a pretty significant overhang on Lin’s [and Media General's] stock should be removed,” Ryvicker said Thursday in a note.
Companies such as Tribune and Gannett Co. have been stepping up TV acquisitions in recent years as payments by cable companies to carry local broadcasts have made the business more lucrative.