Scripps May Divest Minneapolis Station as Part of ION Purchase

A station in the Minneapolis market may be among dozens divested by Scripps as it purchases the ION network, depending on the timing of a New York TV station sale.

KPXM/41.1 (St. Cloud-Minneapolis) and 25 other stations will be divested to INYO Broadcast Holdings LLC for $45 million, according to documents filed with the FCC this week. In a deal announced last month, Scripps is buying ION from an entity controlled by Black Diamond Capital Management for $2.65 billion.

Scripps already owns 60 stations and the divestitures are necessary to comply with national ownership caps. However, Scripps is also in the process of selling WPIX (New York) to Mission Broadcasting, and a document submitted to the FCC indicates the timing of the WPIX deal will affect how many ION stations Scripps can keep.

If the WPIX sale is not complete before the ION purchase closes, KPXM and stations in the Philadelphia and San Francisco markets will be included in the divestiture. If the WPIX sale is completed before or simultaneously with the ION deal, Scripps will keep the Minneapolis, Philadelphia, and San Francisco stations, but still divest the 23 others.*

The addition of the three markets raised the purchase price for the divestiture by $15 million.

INYO has no other broadcast holdings. The company was formed by Methuselah Advisors and will be led by Methuselah’s John Chachas and Louis Zachary, who “have spent their careers advising companies in the media sector,” according to the document filed with the FCC.

The divested stations will remain ION affiliates for at least seven years.

Once the dust is settled, Scripps will own 94 stations in 72 markets. Regionally, Scripps will keep ION stations in the Milwaukee, Cedar Rapids, Des Moines, and Wausau markets, adding to its existing holdings in the Milwaukee, Green Bay, and Omaha markets.

In Milwaukee, the deal will create a duopoly between Scripps NBC affiliate WTMJ-TV/4.1 and ION’s WPXE/55.1. Ownership rules allow the duopoly because only one of the stations is in the top four (WTMJ is #3 and WPXE is #5) and there will still be at least eight TV license owners in the market following the sale.

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*The WPIX factor is an example of the complicated nature of the FCC’s current national ownership cap. The cap is 39% of households nationally, but the “UHF discount” means only half of the households in a market count towards the national ownership cap for stations that are licensed on UHF.

In New York, WPIX transmits on VHF and ION’s WPXN transmits on UHF. That means once WPIX is sold, Scripps will only be considered to reach half of the households in the New York market through WPXN, leaving room to add the Philadelphia, San Francisco, and Minneapolis markets under the national ownership cap.

The “UHF discount” was developed in the analog era when UHF stations were recognized as having inferior reach. The provision has remained in the rules even though UHF is now widely recognized as the superior band for digital TV broadcasting.