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Report: Gray Television Withdraws $8.5 Billion Offer to Buy Tegna Amid Coronavirus Concerns

Stephanie Sengwe

Earlier this month, Reuters reported that Gray Television put in an offer to acquire Tegna Inc. for a hefty $8.5 billion. Though the acquisition would have added to Grayโ€™s $3.8 billion debt, a source told Reuters the company had a plan in place to quickly pay down debt if the deal were to go through.

Well, it seems Gray Television has had second thoughts as Reuters is now reporting that the company has withdrawn their offer. The change of direction came over concerns about how the coronavirus outbreak may affect U.S. regional TV station operators.

“While the regional TV sector is benefiting from increased political advertising this year ahead of the U.S. presidential election in November, TV advertising budgets have been in decline as media consumption shifts to the internet and online streaming. This decline could accelerate should the coronavirus outbreak weigh on consumer spending and the appetite of advertisers to woo them,” Reuters stated.

Though Gray Television may have reneged their offer, private equity firm Apollo Global Management Inc., as well as media mogul Byron Allen, are still vying for Tegna, sources told Reuters.

The latest Tegna news comes at a time when broadcast companies are resorting to consolidation in the wake of the streaming wars and cord cutting. In December 2018, Nexstar Media Group agreed to buy Tribune Media for $4.1 billion, after a $3.9 billion sale to Sinclair was called off months prior. The FCC later approved the merger, which saw Nexstar add Tribune Mediaโ€™s 42 local stations to Nexstarโ€™s 174 stations.

The deal was expected to see Nexstarโ€™s reach grow from 39 to 42 percent of U.S. television households. But as part of the agreement with the FCC, Nexstar had to sell some of their stations to Scripps, Tegna and Circle City Broadcasting.