Sinclair Broadcast receives TV station bids as it pursues Tribune acquisition
Staff and wire reports|
Oct 17, 2017 | 5:50 PM
Sinclair Broadcast Group Inc. has received bids for as many as 10 television stations that could fetch up to $1 billion as it takes steps to win approval of its proposed merger with Tribune Media Co., people familiar with the matter said Tuesday.
Preliminary bids for the stations were submitted last week, said one of the people, who asked not to be identified because the process wasn't public. Hunt Valley-based Sinclair may sell some or all of the outlets, all in different markets, the people said.
The process could be delayed by uncertainty over whether President Donald Trump's appointees will change rules limiting media ownership and how the administration will enforce antitrust laws, the people said. Federal Communications Commission Chairman Ajit Pai has told an opponent of the Sinclair-Tribune deal that the agency may review media ownership rules before ruling on the $3.9 billion transaction.
The conservative-leaning broadcaster said in an FCC filing this month that it's working with Moelis & Co. on potential transactions and that it hadn't identified which stations it might sell.
The FCC is one of two agencies vetting the deal that, as originally proposed, would bring Sinclair 42 more stations and a presence in top markets, including New York and Los Angeles.Sinclair could push ahead with a sale to ease approval under current rules or it might put the process on hold in hopes of a better outcome later, the people said.
Sinclair stock has fallen 16 percent since the Tribune deal was announced May 8. Its shares fell 0.8 percent Tuesday to $30.05.
Sinclair wants to buy stations in 33 markets from Chicago-based Tribune. Tibune Media was formed in 2014 when Tribune Co., then the parent of The Baltimore Sun, split its broadcasting and publishing divisions into separate, independent companies. The broadcast division became Tribune Media, while the publishing division, including The Sun, became Tribune Publishing, renamed tronc Inc. last year.
After acquiring Tribune, Sinclair would have 233 stations, with a presence in 39 of the top 50 markets, according to a Sinclair presentation to investors that calls the resulting combination "the largest broadcasting group" in the country
The FCC said in a Sept. 14 letter that the merger as proposed in May would leave Sinclair exceeding a national TV ownership limit. The agency asked what steps Sinclair planned to take to comply. Sinclair has identified 10 markets where it would exceed the limit, including Seattle, St. Louis and Salt Lake City.
Sinclair announced the deal after the FCC restored a rule that lets companies count just half the audience for some stations. Sinclair told investors the proposed Tribune purchase would leave it with stations covering 72 percent of U.S. households. It told the FCC the company would reach 45.5 percent of the national audience when counting half the audience for some stations. The limit is currently 39 percent.
In letters, Democratic lawmakers asked Pai, who was elevated to FCC chairman by Trump, to address concerns that he had given Sinclair preferential treatment. Pai in a Sept. 15 letter said he'd acted from a belief that a strong broadcast industry advances the public interest and his actions "have not been fueled by a desire to help any particular company."
Pai said in April he would begin a proceeding this year to examine media ownership restrictions, which are designed to make sure communities are served by a diversity of voices.
Antitrust officials at the U.S. Justice Department also are examining the deal. Critics say Sinclair's deal will let it charge higher fees to cable and satellite providers carrying its stations' programming, and should be rejected because of its size.
"The degree to which the proposal would deviate from the rules is unprecedented," Dish Network Corp., which offers satellite and streaming services and pays fees for carrying Sinclair stations, said in an Aug. 7 filing.
Jessica Rosenworcel, a member of the FCC's Democratic minority, said in a speech last week to the U.S. Conference of Catholic Bishops that she is "concerned the commission is gearing up to approve a transaction that will hand a single broadcast company the unprecedented ability to reach more than 70 percent of American households."
The arguments over Sinclair's market share are taking place against a political backdrop of Trump's attacks on the news media. The president threatened the FCC licenses of NBC stations last week because of what he claimed was an erroneous report that he had said he wanted a tenfold increase in the U.S. nuclear arsenal.
Sinclair, which listed 22 NBC stations in an annual filing in February, has supported some Trump policies in conservative commentaries that it requires its affiliates to broadcast.