Gray drops $85M on stations in Florida and Maine

TV tower
Gray will be getting CBS affiliate WABI in Bangor, Maine, and ABC affiliate WCJB in Gainesville, Florida.

Gray Television today announced (PDF) it is spending $85 million to acquire two television stations from Diversified Communications.

Gray will be getting CBS affiliate WABI in Bangor, Maine, and ABC affiliate WCJB in Gainesville, Florida.

Gray is expecting to close the transaction in the second quarter of 2017 using primarily cash on hand. According to a release, the deal for the stations will produce two-year, blended broadcast cash flow margins greater than 50% and will be immediately free cash flow accretive.

The companies said WABI and WCJB are both number one in ratings in their respective markets and that, according to BIA, each station has used its ratings to secure more than 50% of market revenue share during the past several years.

“We are honored to be selected by Diversified as the new owners of legacy stations WABI and WCJB,” said Hilton Howell, Jr., Gray’s chairman and CEO, in a statement. “Both stations are highly valued institutions in their respective communities with dedicated employees who share our vision and culture. We look forward to building upon these strong foundations and enviable records of success.”

“This was a very difficult decision by our Board of Directors, but we feel it is the right one,” said Daniel Hildreth, Diversified’s board chair, in a statement. “We believe that under the ownership of Gray, WCJB and WABI will have greater opportunities for long-term financial success which will ultimately benefit both our employees and viewers.”

RELATED: Gray TV anticipating $90.8M in broadcast spectrum auction proceeds

The $85 million acquisition for Gray comes shortly after the broadcast group announced it expected to receive $90.8 million in proceeds from the FCC’s recently concluded broadcast incentive auctions.

The company said that “Significantly, the actions necessary to receive the proceeds will not lead to job losses and otherwise are not expected to produce any material change in operations or results for Gray or for any individual market in which we operate,” adding that it will announce the affected station or stations at a later date.

The station acquisitions for Gray arrive shortly after the company also bought a handful of broadcast stations off of Nexstar and Media General as part of divestures those two companies needed to make in order to earn FCC approval for their merger.

Nexstar is sold WBAY in Green Bay, Wisconsin, and KWQC Quad Cities (Iowa and Illinois) to Gray.