When Four Points cashes out of television, it really cashes out


Sinclair Television Group made headlines with its $200M acquisition of stations owned by equity firm Cerberus Capital Management, L.P. and its television license companies generally housed under the name Four Points Media Group. According to the contract for the sale of the stations – seven in four markets – Sinclair will be paying cash, but under two highly unusual contract clauses, it will be getting some cash, too.

In a standard broadcast transaction contract, assets to be sold are listed, and so are excluded assets. One of the things you will find in the excluded asset section is cash on hand.

Not this time – the Four Point/Sinclair contract stipulates that Sinclair will be getting $95K in cold, hard cash.
And that’s not all – Sinclair gets another payday for any advertising bought and paid for, but not scheduled to run until after it begins running the station under an LMA, scheduled to start 10/1/11, or after it closes on the station. Here is the relevant clause, which states that Sinclair is to receive “…all prepayments under advertising sales contracts for committed air time for advertising on any Station that has not been aired prior to the earlier of the LMA Commencement Date and the Closing Date.”

The stations include one each in Providence and Austin, two in Salt Lake City, and three in West Palm Beach (two of which are of the Class A variety). Here’s the list:
* KUTV (CBS 2) Salt Lake City, Utah (DMA 32)
* KMYU (MNT 9) Salt Lake City, Utah (DMA 32)
* KEYE (CBS 42) Austin, Texas (DMA 44)
* WTVX (CW 34) West Palm Beach/Fort Pierce, Florida (DMA 38)
* WTCN-CA (MNT 50) West Palm Beach/Fort Pierce, Florida (DMA 38)
* WWHB-CA (AZTECA 48) West Palm Beach/Fort Pierce, Florida (DMA 38)
* WLWC (CW 28) Providence, Rhode Island/New Bedford, Massachusetts (DMA 53)

RBR-TVBR observation: This is an extremely rare thing to see in a transactional document. In fact, we can’t recall ever seeing something along these lines before off the top of our heads. We long ago learned not to say now we’ve seen everything, but at least we can say now we’ve seen another thing.