Raycom Media Inc. most likely will have to sell Channel 24 or Channel 11 because federal rules generally prohibit an owner from having two TV stations in a market the size of Toledo, analysts and broadcast-industry experts said yesterday.
But that shouldn't be a problem, they said, because the demand for TV stations in medium-sized markets is improving. Toledo is about the 70th largest U.S. TV market.
Raycom, of Montgomery, Ala., said Thursday it is buying Liberty Corp., of Greenville, S.C., which has owned WTOL-TV, Channel 11, a CBS-affiliate, since 1968. Raycom owns NBC-affiliate WNWO-TV, Channel 24, a station it bought in 1998.
Raycom, with 37 stations, said it would pay $987 million for Liberty's 15 stations, including assuming $110 million of Liberty debt. Wall Street liked the deal, and Liberty's stock soared nearly 29 percent in New York Stock Exchange trading, gaining $10.06 a share, to close at $47.51, above the $47.35-a-share purchase offer made by Raycom.
Much of the stock's rise came after Mario Gabelli, chief executive of Gamco Investors, called Raycom's price an "opening bid," Dow Jones News Service reported. Gamco is a unit of a company that owns 20 percent of Liberty's stock.
A Raycom executive said the firm would seek a waiver of the Federal Communications Commission rules against one company owning two stations in a market. Under the deal, Raycom would own two stations in four markets, including Toledo.
But waivers "are pretty rare," said Theodore Henderson, a media analyst with Stifel, Nicolaus & Co. in Denver. He said he is not aware of any granted recently.
Dennis Wharton, senior vice president with the National Association of Broadcasters in Washington, said, "It's generally difficult to get a waiver but it's not impossible."
The FCC's ownership rules are "in a state of flux," he said, and the expected addition of two new Republican members to the regulatory panel could tilt the balance toward deregulation.
If the rules are not waived, observers said Raycom presumably would sell Channel 24, which holds a No. 3 spot among late-night news viewership, whereas Channel 11 has the top spot. However, Raycom could seek to switch Channel 11's affiliation to another network.
David Zamichow, general manager of WTVG-TV, Channel 13, said there are ready buyers, especially among smaller broadcast firms.
The industry is warming up to such sales, said Mr. Henderson, the analyst. Last week, for example, Emmis Communications Corp. of Indianapolis sold nine stations for $681 million, five of which went to LIN TV Corp. of Providence, R.I., owner of Toledo's WUPW-TV, Channel 36.
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