Another week, another acquisition, this time from Gray Television, Inc. (NYSE:GTN) in the rapidly consolidating TV market. The company has announced the acquisition of the stable of television and radio stations owned by Schurz Communications, Inc., an Indiana-based television, radio and newspaper media group. Gray is set to cough up $442.5 million in the transaction, which will lift its portfolio to 49 television markets in 28 states, including 39 stations that are ranked number one in their respective markets.
The deal is expected to be closed later this year or in the beginning of 2016 and is expected to immediately impact Gray’s financial bottom line. Schurz Communications will maintain all its non-broadcast assets. Shares of Gray Television have jumped by over 11% in pre-market trading this morning following a 5.29% increase during yesterday’s regular session. Although the number of hedge funds holding the stock did not change during the second quarter, the value of their positions rose by 9.8% to $295 million. Hedge fund legends Ken Griffin and Dmitry Balyasny are among the managers that boosted their investments in Gray Television during the quarter.
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Although its a minor position in the massive portfolio of Citadel Investment Group, Ken Griffin decided to step up his interest in Gray Television, Inc. (NYSE:GTN), increasing his holding of the stock by 152% to 860,658 shares worth $13.5 million at the end of the second quarter. Dmitry Balyasny also sees upside potential for the stock, boosting his stake by 116% to 809,647 shares valued at $12.6 million according to his fund Balyasny Asset Management’s latest 13F filing. Donald Chiboucis also joined the party during the second quarter, having initiated a position that amasses 853,510 shares worth a reported $13.3 million.
Gray Television, Inc. (NYSE:GTN) managed to advance as much as 57% earlier this year before crashing back to the start-of-the-year level amid the recent market selloff. Yesterday’s closing price of $11.74 gave the stock a market cap of $796 million and a trailing Price to Earnings (P/E) ratio of 11.xx, a bit higher than the industry average of 8.00. Analysts have set a forward P/E ratio of 7.25 for the 2016 fiscal year, eyeing significant growth in terms of net sales and earnings per share (EPS). Net sales are expected to reach $709 million, while EPS is estimated to grow to $1.62, triple the estimate for the current year. Gray has been on a spending spree since late 2013, eyeing mainly small, local TV stations and managing to agree to deals for more than two dozen stations, and is set to continue looking for potential deals, albeit at a smaller pace.
“Through the Schurz transaction, we will significantly expand the quality of our portfolio of leading television stations. We welcome more dedicated reporters, account executives, and technologists to our growing family. Quite simply, Gray’s existing stations will make the Schurz stations stronger, while the Schurz stations will make our existing stations better,” commented Hilton H. Howell, Gray’s President and Chief Executive Officer.