AMG hires investment bank to advise it on sale of local TV stations

Allen Media Group has hired a financial firm to help it sell its 25 local TV stations.

AMG, which was founded and run by Byron Allen, is the largest independent owner of TV stations in the U.S. 

It began buying Big Four-affiliated TV stations about six years ago, building up its portfolio to cover 21 markets. 

The total investment was over $1 billion. The company said it has seen interest in its stations, which triggered moving forward with hiring investment bank Moelis & Co. to advise it on a potential sale.

No agreement to sell any of the stations has been reached. AMG says it will use the funds from a potential sale to pay down its debt, which would help the company avoid further refinancing of its existing debt from a variety of media purchases.

Allen Media Group has come under fire for a series of cost-cutting efforts at its local stations (likely to prepare for the potential sale), including a plan to outsource local weather forecasting to sister network The Weather Channel. At one point, the company was reportedly ready to move forward with beginning to eliminate local weather teams at most of its stations. 

The idea was met with significant outcry, largely centered around what critics perceived as an abandonment of commitment to local communities. Arguments were also made that the move could cost lives from removing on-the-ground expertise during severe weather.

Some also felt that AMG could be abandoning the FCC mandate that commercial television stations provide local service to their viewers.

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AMG defended its plans by saying it would allow it to improve weather coverage by using experts stationed at The Weather Channel and that it would still be able to provide important weather alert coverage. 

The plan was largely scrapped, though the station has moved forward with cutting some weather teams at local stations now that the initial attention the idea garnered has cooled down. 

Historically running a local TV station has been a profitable enterprise, but a weakening ad market, general economic uncertainties and shift to streaming have all dug into revenue. Even as those pressures mount, investor pressure to continue to deliver strong — and larger — profits are, in many cases, forcing owners to cut costs in order to improve balance sheets. 

Investments in both employees and capital expenditures are often the target of cuts, with many TV newsrooms running on fewer staffers.

Technology, such as broadcast automation, has delivered some cost-savings thanks to one-time upfront investment that effectively eliminates the need for multiple staff members. However, this tech is becoming more ubiquitous and cutting more from the reduced control room and floor crew has a finite limit.

Many large station groups also save money by “hubbing” services such as master control, graphic design and marketing instead of having a team at each local station. However, this approach has also widely saturated most of the larger TV station groups and further cuts aren’t necessarily possible.

Although AMG is not a public company, it still has investors to satisfy, and the current market conditions continue to pose a challenge for stations.

Given the company’s recent efforts to cut weather staffers, it seems fairly clear that the mother ship was aiming to cut costs even more by hubbing its weather operations. It was never clear how much AMG may have saved if it went through with the weather plan.

It’s not clear who might emerge as a potential buy for AMG stations or if they might be sold off in one or two clusters or one-by-one. 

If one of the larger owner groups were to buy all or most of the stations, it could face potential issues with ownership limits if they already operate one or more stations in an AMG market, though the FCC has fast-tracked a review to lift many of those limits, largely under pressure from industry trade groups and station owners.

AMG did not mention how a potential change in ownership rules might affect its ability to sell the stations.

Below is a list of the stations AMG currently owns that could be part of a sale.

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• KADN Lafayette, Louisiana (Fox)
• KDRV-KDKF Medford/Klamath Falls, Oregon (ABC)
• KEZI Eugene, Oregon (ABC) 
• KHSL-KNVN Chico/Redding, California (CBS)
• KIMT Rochester, Minnesota/Mason City, Iowa (CBS) 
• KITV-KIKU Honolulu, Hawaii (ABC)
• KVOA Tucson, Arizona (NBC)
• KWWL Waterloo, Iowa (NBC)
• WAAY Huntsville, Alabama (ABC)
• WAOW Wausau, Wisconsin (ABC)
• WCOV Montgomery, Alabama (Fox)
• WEEV Evansville, Indiana (CBS)
• WFFT Fort Wayne, Indiana (Fox)
• WJRT Flint, Michigan (ABC)
• WKOW Madison, Wisconsin (ABC)
• WLFI West Lafayette, Indiana (CBS)
• WQOW Eau Claire, Wisconsin (ABC)
• WREX Rockford, Illinois (NBC)
• WSIL Carterville, Illinois (ABC)
• WTHI Terre Haute, Indiana (CBS and Fox)
• WTVA Tupelo, Mississippi (ABC, NBC)
• WXOW La Crosse, Wisconsin (ABC)