Sinclair renews Fox affiliations, has option to buy local station

Sinclair Broadcast Group Inc. will renew Fox Broadcasting Co. affiliations with 19 of its television stations in an agreement that also allows Sinclair to purchase a Fox-owned station in Baltimore.

Under the agreement with Fox, Sinclair has the option to buy WUTB, Fox's MyNetwork station in Baltimore, for up to $52.7 million between July 1 and March 31, 2013.


Sinclair negotiated for the option to strengthen its position as owner of a Fox affiliate in Baltimore, one of the broadcaster's most important markets, David Smith, Sinclair's chief executive and president, said in a statement.

The Hunt Valley-based company owns flagship station and Fox affiliate WBFF-TV, known as Fox 45.

"For us, a pivotal aspect of the agreement was securing our [Fox] affiliation on WBFF-TV," Smith said. "Our Fox affiliate in Baltimore is one of our most important television assets, and over the years the station has built a strong local brand."

Smith added that before reaching the agreement with Fox, Sinclair believed that affiliation was "at risk."

But ownership of WUTB "would solidify WBFF's position as a Fox affiliate in Baltimore in the long term," he said.

If the company exercises its option, it would then have to assign or sell that option to a third party because of federal rules governing television station ownership in a given market, said David Amy, Sinclair's chief financial officer.

Owning an option on a second Baltimore Fox affiliate would give Sinclair "the additional bonus of possibly creating a duopoly (and eliminating a tough competitor) in one of SBGI's most important markets," Marci Ryvicker, a senior analyst for Wells Fargo, wrote in a report on Tuesday.

Radio and television broadcasters refer to a duopoly as a single company that controls two or more stations in the same city.


In return, the agreement says, Fox can purchase Sinclair's MyNetwork/CW stations in up to three of four markets: Raleigh, N.C.; Las Vegas; Cincinnati; or Norfolk, Va., at fair market value. If Fox exercises its option in any of those markets, Sinclair's maximum purchase price for WUTB would be reduced by $25 million, the agreement says.

The agreement to renew all of Sinclair's current affiliations with Fox from Jan. 1 through Dec. 31, 2017, allows the company to continue as the largest Fox-affiliated broadcaster in the United States, Smith said.