KFSM to be sold to Tribune Co.

The Tribune Company announced today that it had entered into an agreement to acquire 19 television stations from Local TV Holdings LLC, including KFSM-TV 5 in Fort Smith and KXNW-TV 34 in Eureka Springs. The sale includes stations in 16 markets.

Tribune will pay $2.725 billion for the stations. The company said in a press release that upon the closing of the sale, Tribune will become the nation's largest commercial television station owner, with a total of 42 stations in some of the nation's largest markets, including the top three markets of New York, Los Angeles and Chicago. The company also owns cable station WGN America, which is on cable systems in 75 million homes across the country.

The sale comes on the heels of Tribune's exit from bankruptcy and rumors that the company may split its newspapers and broadcasting divisions.

In announcing the purchase today, Tribune said the television stations would help the company to significantly increase cash flows.

"Importantly, because most of Local TV's stations are ranked No. 1 or No. 2 in revenue share in their respective markets, the transaction will generate significant free cash flow and be immediately accretive to Tribune's earnings," the press release said, later adding that the benefits of the acquisitions "will translate into increased cash flow and, ultimately, greater shareholder value."

With the purchase of Local TV's properties,  Tribune will have 14 CW affiliates, 14 Fox affiliates, 5 CBS affiliates (including KFSM), 3 ABC affiliates, 2 NBC affiliates and 4 independent stations (including KXNW).

Van Comer, general manager at KFSM/KXNW, said he was excited about the sale, but was unable to make any further statements.

The company said it will finance this transaction with a combination of cash on hand and debt financing.

Tribune has received committed financing of up to $4.1 billion from JPMorgan Chase, Bank of America/ Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse, including a new $300 million revolving credit facility and the capacity to allow Tribune to refinance its existing debt, according to the release.

The boards of both Tribune and Local TV have approved the sale, which Tribune expects to close by the end of 2013, "subject to antitrust and Federal Communications Commission (FCC) approvals and other customary closing conditions."

Jonathan Friesel and Benjamin Diesbach, partners at Oak Hill Capital, a principal owner of Local TV LLC, said they are pleased with the growth they have seen with the station group and are excited for the sale.

"During our partnership together, Local TV has delivered extraordinary growth and become a world-class broadcaster known for its quality programming, technological innovation and strong community service. We wish Tribune well as they build on the history of success these stations have."

Following the announcement, Tribune Co. (TRBAA) was trading up more than 4% at $59.50.