PROVIDENCE, R.I. — LIN Television Corp. received a surprise bid from Raycom Media Inc. that tops an offer of $1.7 billion from Hicks, Muse, Tate & Furst Inc., sources familiar with the transaction said.
Raycom, a TV company controlled by Retirement Systems of Alabama, is offering more than $51 to $54 a share in cash, or as much as $1.93 billion, source said. LIN said earlier that an unnamed company bid more than Hicks Muse's $47.50-a-share offer.
The new offer is likely to set off a bidding war with Hicks Muse, which has set its sights on being one of the largest owners of TV and radio stations. Companies like Hicks Muse and Raycom are taking advantage of looser restrictions allowing them to own more stations. That helps them cut costs and boost profits.
"The appetite of some of these investment funds is very strong," said Porter Bibb, an investment banker at Ladenberg Thalmann & Co.
Officials with Raycom and Retirement Systems of Alabama couldn't be immediately reached for comment. Retirement Systems of Alabama has financed the acquisitions of about 25 TV stations in cities ranging in size from Ottumwa, Iowa, to Memphis, Tenn., in the last two years, said Bear Stearns & Co. analyst Victor Miller.
Those include Ellis Communications for $732 million in 1996 and seven stations owned by Aflac Inc. for $485 million earlier this year.
AT&T Corp. will have a big say in what happens to LIN. Its AT&T Wireless Services Inc. unit owns 45% of LIN, and it has a deadline next year to either buy the rest or put its stake up for sale. AT&T couldn't be immediately reached for comment.
Providence-based LIN, the nation's 22nd-largest U.S. broadcaster, operates eight network-affiliated stations. Its crown jewel is KXAS-TV, a top-rated NBC channel in Dallas, which also has cash-flow margins of about 60%, among the industry's highest.
Hicks Muse went ahead Thursday with plans to enter into a partnership with General Electric Co.'s NBC network that could make it difficult for any other company to take over LIN.
The partnership would acquire a majority of KXAS-TV. More significantly, NBC said any changes in ownership of LIN will need NBC's consent for affiliate agreements in Dallas; Austin, Texas; and Norfolk, Va., to remain in effect.
LIN said Thursday that its quarterly income rose 2% to $9.94 million, or 32 cents a share, from $9.75 million, or 32 cents, in the same period a year ago. Revenue rose 4.6%, to $71.9 million.
LIN's shares rose $50.75, up $4.19, in heaving trading on Nasdaq.