Nexstar Media Group Inc. is already attracting interest from private equity firms and rival media companies for a group of television stations that it’s promised to sell as part of its acquisition of Tribune Media Co., according to people familiar with the matter.
The group includes stations in Indianapolis, where Nexstar will have ownership of multiple stations if the deal goes through.
Cerberus Capital Management and Apollo Global Management LLC, as well as regional broadcasters EW Scripps Co., Gray Television Inc., Meredith Corp. and Tegna Inc., are circling the stations, which could fetch as much as $1 billion, said the people, who asked not to be identified because the details aren’t public.
Nexstar is the owner of WISH-TV Channel 8 and WNDY Channel 23 in Indianapolis, and Tribune Media owns WTTV-TV Channel 4 and WXIN-TV Channel 59. It appears likely that Nexstar will have to sell off one or more of the Indianapolis stations to comply with Federal Communications Commission rules, which limit a company's ownership of stations in a single market to no more than two under most circumstances.
A formal sale process is likely to start in coming weeks and the auction is expected to be completed by the time Nexstar’s merger with Tribune is slated to close in the third quarter of 2019, the people said.
Representatives for Apollo, Cerberus, Nexstar, Scripps and Tegna declined to comment.
A spokesman for Gray said the company will look seriously at every top-rated local television station that comes to market. A spokesman for Meredith declined to comment on specific situations, but said the company is always interested in properties that could add value.
Nexstar chief executive Perry Sook said he’d already had interest from four potential buyers within a couple of hours of announcing its $4.1 billion deal to buy Tribune on Dec. 3.
“So we think it will be a robust process,” he told analysts and investors on a conference call on Monday.
The company is looking to divest stations in at least 13 of the 15 markets where there’s overlap with Tribune, Sook said. Across the 15 markets, including Hagerstown, Maryland; Portland, Oregon; and Indianapolis, the stations generate a combined $150 million in earnings before interest, taxes, depreciation and amortization, the people said.
The stations may be sold in separate packages to avoid broadcasters running afoul of federal ownership rules.
Apollo and Cerberus are vying for the assets after losing out to Nexstar in the battle to acquire all of Tribune, the people said.
Selling the stations while acquiring Tribune would leave the combined company just below the federal ownership cap for stations that reach 39 percent of U.S. households, Nexstar Chief Financial Officer Thomas Carter said on the call on Monday.