What happened

Shares of E.W. Scripps (SSP 7.74%) have skyrocketed today, up by 15% as of 1:13 p.m. EDT, after the company announced it was acquiring ION Media for $2.65 billion. Warren Buffett's Berkshire Hathaway (BRK.A -1.20%) (BRK.B -1.19%) is helping to fund the deal.

So what

Scripps is scooping up the independent television network and plans to combine it with its existing Katz Networks and Newsy businesses. The media company estimates that the acquisition will create $500 million in synergies over the next six years, predominantly derived from carriage fee savings related to Katz Networks.

Hand pointing remote at TV that's displaying a mosaic of images

Image source: Getty Images.

Berkshire Hathaway has agreed to invest $600 million in Scripps, receiving preferred stock and warrants to buy up to 23.1 million additional Scripps shares at $13 apiece. The cash that Scripps is receiving from the Berkshire investment will be used to finance a portion of the ION acquisition, with the rest of the transaction being funded with secured and unsecured debt. Scripps will pay off ION's existing debt as part of the deal.

Now what

Buffett lieutenant Ted Weschler made the investment decision and commented, "As the media industry continues its rapid evolution, Berkshire Hathaway is fortunate to partner with this management team and the Scripps family, who have successfully anticipated the future of media for over a century."

Scripps expects the acquisition to be accretive to free cash flow and margins in 2021. The company will divest 23 ION stations in order to comply with ownership regulations. The transaction is expected to close in the first quarter of 2021.