Tribune Co. has agreed to acquire Cincinnati-based Local TV LLC for $2.725 billion in cash, the companies announced Monday.

The deal will add 19 television stations in 16 markets to Tribune Co.'s portfolio, making it the largest commercial television station owner in the U.S., with 42 properties across the country, reaching 50 million homes. 

Calling it a "transformational acquisition," Tribune Co. CEO Peter Liguori said in an investor conference call Monday that the increased scale of the TV group will benefit everything from content development to distribution, creating $100 million in annual synergies within five years of closing. 

"We believe this transaction is a perfect complement to our existing assets -- superstation WGN America, our new Tribune Studios, Tribune Digital Ventures, our eight major newspapers, and our valuable portfolio of equity investments and real estate holdings," Liguori said. "In short, this deal will help Tribune achieve our goals of delivering great content, expanding our reach and developing new products."

Tribune Co. owns 23 television stations, including WGN-Ch. 9 in Chicago, KTLA in Los Angeles and WPIX in New York. The Chicago-based media company also owns the Chicago Tribune and Los Angeles Times, among other holdings. 

The acquisition of Local TV will add stations in Denver, Cleveland, St. Louis, Kansas City, Salt Lake City and Milwaukee. Once the deal is completed, Tribune Co. will own 14 stations in the top 20 markets, and become the largest Fox affiliate group in the U.S. 

Liguori said that the combined TV group will enable to Tribune Co. to better leverage the negotiated retransmission fees it can charge cable and satellite systems to carry the stations, an increasingly important part of local television station revenue. It will also allow the company to purchase syndicated program more efficiently, and serve as a platform for airing original content.

"With scale, Tribune will be able to take advantage of a larger footprint through which we'll more widely distribute our video and digital content, especially the original content, local news and local programming created through our recently launched Tribune Digital Ventures and Tribune Studios," Liguori said.

The transaction is expected to generate "significant" free cash flow, and help sell advertising at the "highest levels of efficiency," according to Liguori.  He said that Local TV's stations are in 14 swing states, which should generate significant political advertising dollars for Tribune Co. going forward. 

Principally owned by private equity firm Oak Hill Capital Partners, Local TV was launched in 2007, with the acquisition of nine TV stations from the New York Times Co. In 2008, Local TV purchased eight Fox-owned stations from News Corp. 

Local TV's first CEO was Randy Michaels, who left within the first year to join Tribune Co., where he rose to CEO while the company was in Chapter 11 bankruptcy. Michaels was forced out at Tribune Co. in 2010. 

In addition to its own stations, Local TV operates two Tribune Co. stations: KWGN-TV in Denver and KPLR-TV in St. Louis.

"Local TV and Tribune have had a long, successful relationship over the last five years," Bobby Lawrence, CEO of Local TV, said in a statement. "Our cultures and operating philosophies are very similar, and we share a strong commitment to news and local programming excellence.  My management team will dearly miss working with some of the most talented and dedicated people in broadcasting, but we know we leave our employees in good hands."

Tribune Co. has received financing commitments of up to $4.1 billion from JPMorgan Chase, Bank of America, Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse, including a new $300 million revolving credit facility and the capacity to refinance its existing debt. JPMorgan owns about 9 percent of Tribune Co., which emerged from Chapter 11 in December.

The transaction has been approved by the boards of both companies and is expected to close before the end of the year, subject to antitrust and Federal Communications Commission approvals, according to Tribune Co.

The market for television-station acquisitions has been heating up this year. Last month, Gannett Co. nearly doubled its television portfolio by buying 20 stations from Texas-based Belo Corp. for $2.2 billion. Tribune Co. did not rule out additional station acquisitions but said it would focus on integrating Local TV into its operations. 

In February, Tribune Co. hired investment bankers to manage inquiries for its eight daily newspapers, which were valued last year at $623 million. Some 40 parties have expressed interest in acquiring some or all of Tribune Co.'s newspapers, according to sources close to the situation. 

Would-be buyers were expected to have access in May to a "data room," a secure Web site containing detailed financial information about the company.  That data have yet to be released, according to sources.

Liguori said the pursuit of Local TV did not delay the newspaper sale exploration and reiterated Monday that divestiture is not the only option.

"We're looking at all of our strategic options when it comes to newspapers," Liguori said.

rchannick@tribune.com | Twitter @RobertChannick