How Lucrative is EW Scripps’s $2.65 Billion Acquisition of ION Media?

By Thomas Price Thursday, October 1, 2020

In a sprint to create a national television networks business, EW Scripps Company has made a major play in manifesting that goal with some major help from Berkshire Hathaway. EW Scripps Company recently acquired ION Media to build nationwide television coverage for hundreds of millions of Americans. It will make EW Scripps Company a national television network business with incredible broadcasting power. This purchase changes a major part of the television landscape and has long-standing effects for both companies moving forward. So, what can be expected regarding EW Scripps Company, Berkshire Hathaway, and the long term goals of acquiring ION Media given its impressive broadcast reach?

EW Scripps Company and the Acquisition

The EW Scripps Company is an American broadcasting company that holds the second-largest stake in ABC behind the Sinclair Broadcast Group. Founded in 1878, EW Scripps began as a daily newspaper chain in Cleveland. Since then, the company has seen incredible expansion with the advent of new media available to the public. In terms of revenues, EW Scripps Company has reported an upward trend every year over the last five years. In 2015, the company earned $715.66 million, which, in a vacuum, is an impressive number. However, in comparison to their annual revenue in 2019, which was upward of $1.42 billion, their 2015 earnings look sparse. These jumps in revenue can be largely attributed to the many different acquisitions that EW Scripps has had in the last few years, the highlights of which are Cracked and Stitcher in 2016 and Katz Broadcasting in 2017 for $292 million. Because of this rapid expansion and large outreach, EW Scripps Company currently has a market value of around $850 million.

Each of these has added more depth to the broadcast network that EW Scripps is in control of; however, the acquisition of ION Media has been the largest addition so far. The purchase of ION Media was for the whopping price of $2.65 billion. With the price tag being so high, EW Scripps was unable to make the purchase without help from outside sources. In fact, in order to finance the acquisition, EW Scripps Company got help from Berkshire Hathaway, who made a $600 million equity investment into the company specifically for this. In return, Berkshire Hathaway will receive a warrant to purchase up to 23.1 million Class A shares as a token of appreciation of sorts. Considering how large of an acquisition this is, what exactly does ION Media bring to the table for EW Scripps Company?

ION Media’s Value as a Company

ION Media’s major value to EW Scripps Company is the incredible reach it has to American households. In fact, ION reaches over 100 million different homes through the airwaves or on a paid TV platform. In addition to this, ION Media consistently reports high-quality earnings and has maintained large levels of profitability. In fact, the acquisition of ION Media will result in $500 million over the next six years from contractually based synergies alone. In combination with Newsy and Katz, also owned by EW Scripps Company, there will be an estimated $120 million a year generated from synergies. ION Media by itself has had some extremely lucrative years. In 2019, ION Media reported $587 million in annual revenue. During the ten-year period from 2009 to 2019, ION Media saw a compound annual growth rate (CAGR) of 12%, showing steady and consistent development as a company.

Another major point for EW Scripps is the ability to now broadcast over the air without having to obtain expensive leasing payments. Because of this acquisition and the acquisitions previously mentioned, EW Scripps will be able to reach nearly every American home. ION alone reaches 96% of American homes, so this acquisition virtually locks up the entire market. With this wide-scale outreach, along with the steady money from synergies, EW Scripps Company is expected to make its return on investment back starting in 2021.

Final Conclusions

Along with a hefty investment from Berkshire Hathaway, EW Scripps Company has acquired a steady, wide-reaching, and profitable company in ION Media. In doing so, they have created a national television networks business with a promising outlook and incredibly strong revenues. EW Scripps Company will be set to make back their money and then some within the first year of ownership, and this trend of high revenues appears set to continue into the near future. While the price for the acquisition was steep, it is without a doubt looking like ION Media, with their outreach sitting at a cool 96% of United States households, will be worth every single penny of the $2.65 billion price tag.

About the Author

Headshot of Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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