Tribune Doubles Down on Television, Buys Local TV

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Updated from 9:20 a.m. ET with comments from the conference call and current market information.

NEW YORK (TheStreet) -- If anyone had any doubts as to where Tribune is headed, the Chicago-based media company cleared up any confusion by announcing plans to acquire Local TV Holdings, the privately-held owner of 19 television stations in 16 U.S. markets, for $2.725 billion in cash.

Acquiring Local TV will increase Tribune's stable of local network-affiliated television stations to 42 spread out among 16 markets including New York, Los Angeles, Miami and Seattle. Tribune will also become the largest affiliate of 21st Century Fox 's television group well as the top affiliate of CW, the joint-venture between Tribune and Time Warner .

So, who said TV is dead?

"This is a transformational acquisition for Tribune," CEO Peter Liguori, the longtime television executive hired in January, said in a conference call with investors. "Our investment thesis is simple: scale matters. Scale enhances all elements of our business."

Shares of Tribune, which trade over-the-counter, gained 5.5% to close on Monday at $60.

The former chairman of Fox Broadcasting, Liguori said Tribune's expanded television holdings will give the company more clout when negotiating deals with the network and advertisers as well as in the development of new content.

The acquisition follows a similar deal by Gannett , the country's largest newspaper company, which announced plans to purchase Belo Corp. , the Dallas-based broadcast television-station operator, two weeks ago in a $1.5 billion deal that increased McLean, Virginia company's broadcast portfolio from 23 to 43 stations.

Tribune, the company said in a statement, will become the country's largest commercial TV station owner once the deal closes later this quarter. Tribune also said the deal will be immediately accretive to Tribune earnings, an important point considering the company exited bankruptcy in December after a messy four-year effort to clean-up its finances following its 2007 buyout led by the real estate mogul Sam Zell.

The acquisition of Local TV, based in Newport, KY., comes as Tribune has hired Evercore Partners and JPMorgan Chase to explore the possible sale of its eight daily newspapers, a group that includes the Los Angeles Times, the Chicago Tribune, the Orlando Sentinel, the Baltimore Sun and the Hartford Courant. Among those interested in buying Tribune's newspapers are David and Charles Koch, the multi-billionaire owners of the oil and chemicals conglomerate Koch Industries.