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Sunday, December 23, 2007

Cleveland Fox TV Affiliate Sold: Murdoch's News Corp. Dumping 'Low-Growth' Assets

CLEVELAND (TDB) -- WJW-TV, Channel 8 has been sold to a Texas investment group. Rupert Murdoch's News Corp. says it has a $1.1 billion cash deal that will allow it to rid itself of broadcast outlets in 8 U.S. cities where the Fox properties have little prospect of growth or enhanced revenue. The sale of the Cleveland station may forebode similar events ahead for other once-untouchable MSM outlets in Ohio -- it is occurring as newspapers and TV profits take a beating as advertisers and audiences switch to the Internet. At $1.1 billion for the 8-station package, the average price of the Fox outlets is $138 million apiece, probably far less than they were worth just a few years ago.

Bloomberg has the story about Cleveland deal, which appeared in today's International Herald Tribune. It noted the Texas buyout firm has been on the prowl looking for TV stations, and grabbed several New York Times Co. properties earlier this year.

"The sale will probably be completed in the third quarter, News Corp. said in a statement issued Saturday. The purchase will help Oak Hill, the buyout firm founded two years ago by Robert Bass, a Texas Oil billionaire, create a broader U.S. network. In May, it paid $575 million to acquire stations in Oklahoma, Pennsylvania, Iowa and Arkansas from the New York Times Co. 'It's part of News Corp.'s strategic decision to shed low-growth, noncore assets,' said Richard Dorfman, managing director of the investment firm Richard Alan.

"For Oak Hill, the purchase is 'a classic private equity play,' Dorfman said. 'Ad dollars are migrating to the Web, but it's a government-licensed franchise that can throw off good cash flow and reliably service debt.'"

Those who follow Wall Street and finances know that private equity firms often try to wring money out of their acquisitions by eliminating staff and finding other spots to cut the budget. The sale by News Corp. should send shivers to everyone who works at WJW-TV, and it ought to be a signal of chilly times to come for MSM workers across the state. News Corp. is a company that likes to grow and expand -- it started the Fox Network, FOX News Channel and just bought the Wall Street Journal for $5 billion. If this MSM giant is bailing out of Cleveland, can others be far behind?

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