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What: Shares of Gannett were booming today, jumping as much as 35%, after it agreed to buy TV-company Belo for $1.5 billion.
So what: The deal was clearly seen as win-win, as Belo shares jumped 28% on the news. While it's normal for a target company to jump upon acquisition news, the buyer's shares almost never move this much. The deal will make Gannett, the owner of USA Today, the nation's fourth-largest media company and largest newspaper publisher, and gives it a stronger foothold in broadcast media. The purchase will give Gannett 20 more TV stations, bringing its total to 43, 21 of which are in the top 25 media markets. Broadcast media also is growing much faster than publishing, which has generally been declining, and the deal will give Gannett greater bargaining power with cable and satellite providers.
Now what: The news even caused LIN TV and Gray Television to spike 20% and 17%, respectively. Gannett's purchase could pave the way for similar deals, and makes evident the value of television stations, as there a limited number of them. For Gannett, the move seems to be a step in the right direction, though a 35% increase in share price seems exaggerated considering its inheriting $715 million in debt along with the $1.5 billion its shelling out to buy Belo. Belo's 2012 net income was $100 million. You can stay on top of this developing story as Gannett integrates the TV provider. Just click right here to add the company to your Watchlist.
The article Why Gannett and Belo Shares Jumped originally appeared on Fool.com.
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