What’s The Setting For The Sinclair-Tribune Spin Cycle?

1

Fresh details were revealed Wednesday regarding Sinclair Broadcast Group‘s blockbuster merger plans with Tribune Media, thanks to the official filing of a flurry of Form 315 applications with the FCC.


While the deal could only be made possible with the pending reinstatement of the FCC’s “UHF discount,” which allows broadcast TV stations to deduct by 50% the audience of a UHF station toward the national cap, Sinclair revealed that it could divest stations in no less than 10 different markets.

It also shed light on what the future is for the handful of radio stations it owns, and will soon add to its small stable.

In a hefty 103-page document dated May 8—the day that Sinclair and Tribune Media announced their historic deal—the companies reiterated much of what was stated at that time.

Sinclair acquire all of the issued and outstanding stock of Tribune for $43.50 per share, for an aggregate purchase price of approximately $3.9 billion. Sinclair will also assume approximately $2.7 billion in net debt.

There’s a lot of official language and detail regarding the merger in this document.

It is a second 64-page “Comprehensive Exhibit” filed alongside the Agreement and Plan of Merger that perhaps yields the most noteworthy information regarding the merger.

In the document, Sinclair states, “The applicants own stations in several markets where Sinclair’s common ownership of the combined stations would exceed the current limits imposed by the Commission’s local television ownership rules. Accordingly, the applicants intend to take actions in such markets as necessary to comply.”

Of course, with the return of the UHF Discount likely imminent, Sinclair adds, “To the extent that there are changes, or proposed changes, to the local ownership
rules that would permit acquisition of the Tribune licenses in any of these markets, the applicants may file amendments to the applications to address such changes.”

Therefore, it says, “To the extent that divestitures may be necessary, applications will be filed upon locating appropriate buyers and signing appropriate purchase agreements.”

Overlap markets where current FCC rules would not allow Sinclair to acquire the Tribune licenses include Seattle-Tacoma, where Sinclair owns KOMO-TV and KUNS-TV and Tribune owns KCPQ-TV and KZJO-TV.

This appears to be the market where a divestment is all but assured.

The same can be said of Oklahoma City, as Sinclair is the licensee of KOKH-TV and KOCB-TV, while Tribune is the licensee of KAUT-TV and KFOR-TV.

While Greensboro, N.C.; St. Louis; and Salt Lake City are listed, Sinclair owns one station while Tribune owns two stations in the respective markets. Changes in FCC ownership limits could make a threesome permissible, while a quartet is unlikely.

Meanwhile, a duopoly situation in Portland, Ore., is likely to pass muster as Sinclair owns KATU-TV, and Tribune owns Salem, Ore.-licensed KRCW-TV. The same can be said of Grand Rapids, Richmond, Harrisburg-York, and Des Moines.

Then, there are four markets where Tribune currently owns multiple stations, and current FCC rules would not allow Sinclair to acquire the Tribune licenses.

These markets include Washington, D.C., where Sinclair owns ABC affiliate WJLA-TV and Tribune owns ratings laggard WDCW-TV. WDCW’s low ratings are a linchpin to Sinclair’s ownership of The CW affiliate—WDCW is not a Top Four station in the market, and because there will remain at least eight independently owned and operated television stations in the market post-merger, Sinclair’s common ownership of WJLA and WDCW will comply with the local ownership rules.

A similar scenario can be seen in Milwaukee, where Sinclair owns WVTV-TV and Tribune owns WITI-TV. WVTV is not a Top Four station, and because there will remain at least eight independent voices in the market post-merger, Sinclair’s addition of WITI is good to go with the Commission.

In New Orleans, Sinclair owns no stations. But Tribune has a duopoly in WNOL-TV and WGNO-TV. The former is not a Top Four station.

Similarly, Denver is a market with no Sinclair stations while Tribune has ownership of KWGN-TV and KDVR-TV. KWGN is not a Top Four station.

RADIO STATIONS NOT FOR SALE

While Sinclair in August 1999 shed 46 of its radio stations to Entercom for $824.5 million in cash, with Emmis eventually acquiring the remaining stations held by Baltimore-based Sinclair, it returned to radio station ownership with its acquisition of Fisher Communications in April 2013.

That deal gave Sinclair ownership of KOMO-AM, KVI-AM, KPLZ-FM and the right to acquire KOMO-FM in Oakville, Wash., which it executed earlier this month.

Once the Tribune deal closes, the radio stations will remain intact, as a four-station cluster. On the TV side, however, Sinclair notes that it will own KOMO-TV, and welcome Tribune’s KCPQ-TV and KZJO-TV.

“Because there will remain more than 10 independently owned television and radio voices in the market post-merger, Sinclair’s common ownership of these radio stations will comply with the radio-television cross-ownership rule,” Sinclair says.

What it did not say is that KUNS-TV is being put on the market.

Meanwhile, the addition of WGN-AM and WGN-TV in Chicago will go without a hitch, and Sinclair will continue to own the legendary radio station.

The Comprehensive Exhibit also offers details on the continued common ownership of stations operating under failing station waivers, which impact stations in the Hartford-New Haven, Conn., and Fort Smith, Ark., markets.


You do not have permission to view the comments.