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Rumored Apollo Management Buyout of Cox TV: What Does It Mean?

R

RoddyFreeman

CNBC is reporting that Apollo Global Management is nearing a deal to acquire Cox TV's 14 stations.

Apollo is not a broadcast company; it's a private equity firm specializing in leveraged buyouts. It buys all kinds of companies: Chuck E. Cheese, Caesars Entertainment, Career Builder and Norwegian Cruise Line are some of them.

Apollo has an agreement to acquire the assets of Northwest Broadcasting, an owner of TV stations in several small markets. The company is also bidding for the stations that Nexstar will have to spin off when it acquires Tribune Media. Apollo tried unsuccessfully to purchase both Nexstar and Tribune.

According to the report Apollo is discussing some joint venture agreements with Cox's broadcast properties here in Atlanta. What would that entail? Remaining in the same building? Using the Cox Radio and AJC resources for news? Employing some current management?

I don't know enough about Apollo's management of other acquisitions to predict what this would mean for Cox TV if it came to fruition. I do, however, associate private equity with high debt, and with the acquirer believing it can significantly increase profitability.

Cox's TV properties are the cream of the crop. I would like to see them stay that way.
 
I agree with your assessment. We see what's happened to radio companies that have sold to private equity companies.

I have no reason to believe this one is any different.

What does it mean? It means a good payday for the Cox family.
 
TheBigA said:
I agree with your assessment. We see what's happened to radio companies that have sold to private equity companies.

I have no reason to believe this one is any different.

What does it mean? It means a good payday for the Cox family.
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I wonder if there will be only one TV news Helicopter left in Atlanta shared by all the stations.
 
RoddyFreeman said:
CNBC is reporting that Apollo Global Management is nearing a deal to acquire Cox TV's 14 stations.

Apollo is not a broadcast company; it's a private equity firm specializing in leveraged buyouts. It buys all kinds of companies: Chuck E. Cheese, Caesars Entertainment, Career Builder and Norwegian Cruise Line are some of them.

Apollo has an agreement to acquire the assets of Northwest Broadcasting, an owner of TV stations in several small markets. The company is also bidding for the stations that Nexstar will have to spin off when it acquires Tribune Media. Apollo tried unsuccessfully to purchase both Nexstar and Tribune.

According to the report Apollo is discussing some joint venture agreements with Cox's broadcast properties here in Atlanta. What would that entail? Remaining in the same building? Using the Cox Radio and AJC resources for news? Employing some current management?

I don't know enough about Apollo's management of other acquisitions to predict what this would mean for Cox TV if it came to fruition. I do, however, associate private equity with high debt, and with the acquirer believing it can significantly increase profitability.

Cox's TV properties are the cream of the crop. I would like to see them stay that way.
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Here is what will happen: If it's a complete sale, the new folks will announce that these are the greatest TV stations in America and they aren't going to change anything. Don't believe it. An honest venture capitalist which is pretty much an oxymoron...if you are honest, you wouldn't be in that type work...but a candid venture capitalist will admit that they are in it for a quick kill. They have already identified cost savings and soon as the ink has dried on the press releases and the TV trade publications/websites have moved on to the next story they will bring out the knifes. The good management people will have already started retiring before the sale. The ones left will be gone within the first year, likely sooner. I am sure there is some fat in the Cox operations but don't kid yourself. They have cut a great deal of that out themselves. It wasn't that long ago the AJC was losing millions every month. Plus, Cox took on several billion in debt to take the cable TV business private. I keep hoping the family might carve out WSB TV/Radio Stations/and AJC as a vanity move. How else can they ensure they will be invited to all the high society events! The AJC has been about the only check on Georgia politics the past twenty years. They always played a big role but lately they are it. I don't know how much difference the on air product will be. Frankly they air some pretty minor crap on the news. You will have something like an EF4 tornado destroying a town in North Georgia...they will tease it at the top of newscast but then tell you about some lady in Stone Mountain who hasn't gotten her mail in three months. The other night they had a story about someone driving their car into a store window. Hell, that happens how many times every day in America's 9th largest market! And the consultants have the guy anchoring 6 and 11 thinking he is some sit down comic. It's ridiculous.
 
MediaMan said:
An honest venture capitalist which is pretty much an oxymoron...if you are honest, you wouldn't be in that type work...but a candid venture capitalist will admit that they are in it for a quick kill.
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I agree with a lot of that. As you say, the quicker the flip the better. They don't know anything about broadcasting, so they don't want to get stuck for the long haul. The problem is there's not much upside if they completely decimate the company. The only way to make a profit is to retain the quality image somehow. Obviously wiping out the high priced management is a way to cut costs, but they have to find a way to make a profit. That means buy low, sell high. That's a very different thing.
 
So that's it.... So no more talk of Channel 2 being bought by ABC or NBC? This sucks. Sounds as if Channel 2 will just be owned by some low budget company that couldn't care less about keeping the station alive..... Wow....šŸ˜ž
 
Maybe I'm reading this too quickly, but it appears to be exactly the kind of deal Cox was looking for. It's a partnership, with Apollo providing the capital, and Cox retaining management. They will form a separate company to run the TV stations, the family gets their cash buy out, and the stations stay basically the same. Right? Am I missing something?
 
TheBigA said:
Maybe I'm reading this too quickly, but it appears to be exactly the kind of deal Cox was looking for. It's a partnership, with Apollo providing the capital, and Cox retaining management. They will form a separate company to run the TV stations, the family gets their cash buy out, and the stations stay basically the same. Right? Am I missing something?
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The press release makes it sound like that. And employees are interpreting the deal as such.
 
The newspapers, radio stations and WHIO-TV in Dayton share a unique business model that involve full integration of their operations.
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How "non-integrated" are WSB Radio/TV/AJC by comparison?
 
LegalTender said:
How "non-integrated" are WSB Radio/TV/AJC by comparison?
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I thought Cox Atlanta all shared the same newsroom now...?

How long will it be before Apollo starts putting the screws to Cox management to cut costs?
 
TheBigA said:
Did you read the press release? It sounds like they want management to build value, not cut costs.
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If you're willing to take them at their word...wouldn't be the first time where the former turns into the latter.
 
jabba17 said:
If you're willing to take them at their word...wouldn't be the first time where the former turns into the latter.
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If the goal is to flip for a profit, then they need to build value. Otherwise why spend the money?

When the former turns into the latter, the investment company ends up eating a loss.
 
My question is: Why Dayton? Dayton is the only market where in addition to TV, Apollo is purchasing a majority interest in Cox's radio and newspaper properties. It's also where Cox was founded.
 
RoddyFreeman said:
My question is: Why Dayton? Dayton is the only market where in addition to TV, Apollo is purchasing a majority interest in Cox's radio and newspaper properties. It's also where Cox was founded.
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I think I can answer this. Since I live in Dayton all the stations are pretty intertwined. WHIO TV personalities appear on WHIO AM/FM and WHKO is number 1 in the market. With what you mentioned about Cox being founded here it makes sense to keep all of the stations and the newspapers together because they are so synched together.
 
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