News Corp. To Sell 8 TV Stations To Oak Hill Capital Partners For About $1.1 Bln Cash

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Saturday evening, media conglomerate News Corp. (NWS) said it agreed to sell its eight FOX network affiliated television stations to a private equity firm Oak Hill Capital Partners for about $1.1 billion in cash.

News Corp. said that following the sale of the eight stations to Oak Hill Capital Partners, Fox Television Stations will continue to be one of the nation's strongest and most successful station groups with 27 owned-and-operated stations, nine duopolies in major markets as well as single stations in nine mid- to large-sized markets.

The deal culminated the sale process announced by News Corp. in June, when it retained Allen & Company as its advisor in its process to sell nine of its FOX network affiliated television stations.

Profits have been declining at News Corp.'s television unit as well as its Fox segment in recent times as higher programming costs have been offsetting revenue growth. Lower political advertising revenues and declining advertising revenues at the MyNetwork affiliated stations have also been eating in to the profits of Fox Television Stations.

For the recently concluded first quarter, News Corp.'s television segment' operating income declined to $183 million from $192 million in the year-ago quarter due to lower contributions from the Fox Television Stations and a full quarter of losses at MyNetworkTV, which was launched in September 2006.

The company's consolidated profit also fell to $732 million or $0.23 per share from $843 million or $0.27 per share in the same period last year. However, media giant's quarterly revenues were up 19% to $7.07 billion.

The sale news comes at a time when Rupert Murdoch's firm acquired publisher Dow Jones in a deal that is values Dow Jones over $5 billion. During the month, stockholders of Dow Jones, which publishes The Wall Street Journal, approved News Corp.'s offer to buy the company.

Shares of News Corp. ended Friday's trading higher by 67 cents or 3.18% at $21.74. During the past 52-weeks, the stock has been trading between $19.68 and $25.78.

Oak Hill Capital Partners said that the acquisition of TV stations is expected strengthen its Local TV Portfolio, which was created earlier this year by Oak Hill to buy nine TV stations from New York Times Company (NYT) . Oak Hill bought nine TV stations from New York Times for $575 million in the first half of this year.

Taylor Crandall, a Managing Partner of Oak Hill Capital Partners, said, "We are very pleased to add this outstanding portfolio of FOX affiliated television stations to the Oak Hill portfolio. These stations, like our existing Local TV television stations, have a strong commitment to providing quality news and serving the local community."

Bobby Lawrence, CEO of Local TV, said, "These are heritage stations in great markets. Their management teams and operations are a perfect fit with Local TV. The stations have an outstanding track record and we look forward to helping them continue their success."

The acquisition, which is subject to regulatory and other customary approvals, is expected to close in the third quarter of 2008.

Related to this transaction, Oak Hill Capital was advised by Deutsche Bank Securities Inc., Dow Lohnes PLLC and Paul, Weiss, Rifkind, Wharton & Garrison LLP. Also, debt financing for this transaction has been committed to by affiliates of Deutsche Bank Securities Inc., UBS Securities LLC, Banc of America Securities LLC, and BNP Paribas Securities Corp.

Oak Hill Capital Partners is a private equity firm created by billionaire oilman from Texas, Robert Bass. The firm has more than $7 billion of committed capital from leading entrepreneurs, endowments, foundations, corporations, pension funds and global financial institutions. Oak Hill Capital invests primarily in middle-market companies with strong fundamentals, favorable competitive positions, attractive growth prospects, and superior management teams.

During a period of over 21 years, the professionals at Oak Hill Capital Partners have invested in more than 60 significant private equity transactions. Oak Hill Capital Partners is one of several separate Oak Hill partnerships, each of which has a dedicated and independent management team. These Oak Hill partnerships comprise more than $26 billion of investment capital across multiple asset classes.

Last month, Oak Hill Capital agreed to acquire Firth Rixson Ltd., a leading supplier of highly engineered rings, from investment funds managed by The Carlyle Group and Lehman Brothers for approximately 945 million ($2.0 billion). The transaction is expected to close in December 2007, subject to receipt of regulatory approvals.

Private-equity firms want to buy companies for their portfolio, fix them, grow them and sell them in three to five years. The eventual buyer could be another company in the portfolio company's industry, another private-equity firm or the public, through an IPO. The holding period is occasionally less than a year or as long as ten years. But always the goal from day one is to sell the company at a profit.

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