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Sinclair Broadcast plans to buy cable Tennis Channel for $350 million

Sinclair Broadcast Group headquarters in Hunt Valley
(Kenneth K. Lam / Baltimore Sun)

Sinclair Broadcast Group said Wednesday that it plans to buy the Tennis Channel, a live sports cable channel, for $350 million.

Hunt Valley-based Sinclair, one of the nation's largest independent broadcasters and the largest producer of local news, said it was attracted to the only major sports network left under independent ownership as it expands programming in areas such as sports and entertainment.

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It would be the first national cable channel acquisition for Sinclair, which owns, operates and provides services to 171 local television stations in 81 markets.

"Tennis Channel is an established property with high-quality content and advertisers, and is vastly under-compensated and under-distributed relative to the value it brings to its viewers," said David Smith, Sinclair's president and CEO, in the company's announcement. "We knew we could unlock value."

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The 24-hour channel, launched in 2003, airs 90 percent of U.S. live tennis. It focuses on professional tennis and the tennis lifestyle, airing the sport's top 100 tournaments. Original shows and specials cover health, fitness, travel and tennis news, and include documentaries.

Sinclair said it has negotiated agreements with several multichannel video programming distributors that would increase the channel's reach to about 50 million homes from the current 30 million.

"Nothing is more valuable to video distributors than high quality, live sports, and we expect the increased carriage of Tennis will be well received by their subscribers," said Barry Faber, Sinclair's executive vice president and general counsel, in the announcement.

Sinclair will boost the Tennis Channel's brand "to the next level," helping to increase advertising and sponsorship business and develop the brand internationally, said Ken Solomon, the Tennis Channel's chairman and CEO.

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Reports about the possibility of such a deal first emerged in September.

The deal, subject to approval by antitrust regulators, is expected to close in the first quarter. It would be funded through cash and a draw on Sinclair's revolving line of credit.

Smith said the channel's subscriber base would create about $200 million of incremental value at closing. The company said it expects to reduce future tax payments by about $65 million by carrying forward more than $200 million of the cable channel's operating losses.

Sinclair launched Comet, a broadcast science fiction channel, Oct. 31, and started a college live sports network in 2014.

"We really like [Sinclair's] continued investment in content," wrote Marci Ryvicker, senior analyst with Wells Fargo Securities, in a report Wednesday. "We believe the company's diversification into other types of TV networks via this cable deal, and its previously announced digital networks of American Sports Network and Comet are great strategic moves for continued financial growth."

Sinclair shares closed up 52 cents at $31.24 in Wednesday trading.

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