Sinclair to buy Dielectric


SBG / Sinclair Broadcast GroupSinclair Broadcast Group has entered into an agreement to purchase the assets of Dielectric from SPX Corporation. New products from Dielectric’s diversified RF catalog, along with support for existing installed product, will be provided by current employees. Dielectric will be operated as a wholly-owned subsidiary of Sinclair (Dielectric, LLC) with a management and operational team comprised of the Dielectric staff.  The company will maintain operations at their present facility in Raymond, Maine.

Dielectric is the nation’s largest manufacturer of broadcast television, radio and wireless antennas, transmission lines, and RF systems.

Commenting on the transaction, David Smith, President and CEO of Sinclair stated, “Dielectric has supplied more than two-thirds of the TV industry’s high power antennas and its name is synonymous with expert engineering and quality products.  We feel fortunate to have this opportunity to acquire the Dielectric intellectual property and assets related to our most critical infrastructure. This acquisition was a logical choice given our in-house RF engineering expertise and our ownership of Acrodyne Services, which installs and services broadcast transmitters and mobile DTV upgrades. Further, if and when a spectrum repack occurs, Dielectric will be there to support that effort.”

Marci Ryvicker, Wells Fargo Securities Senior Analyst said the move is good for the industry:

“This morning (6/18), Sinclair announced its intent to purchase the assets of Dielectric from SPX Corporation for ”an immaterial and leverage neutral purchase price.” Dielectric is the nation’s largest manufacturer of broadcast television, radio and wireless antennas, transmission lines, and RF systems, and has provided roughly two-thirds of the U.S. TV industry’s high-powered antennas.

Purchasing Dielectric buys an insurance policy for the entire U.S. TV industry. Dielectric was scheduled to be shuttered by SPX on June 29th; a problem for many TV operators given the company provided vital broadcast equipment to much of the industry. The only alternative providers of this equipment are foreign, so replacing equipment would’ve been much more expensive – both in terms of pure cost, and revenue lost to longer repair times.

If there is a spectrum repacking – Dielectric could reap huge benefits. Recall that as a part of the broadcast incentive auctions, the FCC has proposed a repacking of broadcast TV spectrum, which would require many stations to replace their antennas (this cost would be covered by the federal government). If this were to occur, we believe Dielectric would be a major provider of these new antennas given its leadership position in the industry.

The purchase price was immaterial! Though no specific purchase price was disclosed SBGI clearly stated the price was immaterial and leverage neutral.

BOTTOM LINE: We view today’s acquisition as a positive, industry-friendly move that could provide significant long-term benefits for SBGI, especially in the event of a spectrum repacking.