Sinclair adds radio, TV stations $630 million cash deal with Australia's News Corp. buys 30 outlets; Rapid growth continues; Purchase is expected to increase leverage on programming costs; Broadcasting

THE BALTIMORE SUN

Continuing its rapid growth strategy, Sinclair Broadcast Group Inc. said yesterday that it will buy Heritage Media Group's six television and 24 radio stations for $630 million in cash.

The Baltimore-based operator of radio and television stations said the deal is subject to regulatory approval and would not take place until the first quarter of 1998. Australian-based News Corp. Ltd. is in the process of purchasing Heritage Media Group, which also provides supermarket coupons and promotions, for $1.35 billion. After News Corp. completes the acquisition, it will sell the stations to Sinclair.

Once the purchase is complete, Sinclair would have about $580 million in annual revenue and would own or provide programming and management services for 35 television stations and 58 radio stations. Sinclair will add TV markets, including Burlington, Vt., and Mobile, Ala., and radio outlets in St. Louis and New Orleans. The purchase would be financed completely by bank borrowings.

"I think it is a good acquisition for Sinclair. These are good stations in good markets," said Paul Sweeney, a Salomon Brothers analyst.

With its larger size, Sinclair will increase its bargaining power with the production companies that sell syndicated programming. Sinclair uses a lot of syndicated shows because its station lineup is heavily concentrated in emerging TV networks such as Fox and Warner Brothers that don't offer day-long network schedules. Earlier this week, Sinclair agreed to switch five of its TV stations to the WB network, owned by Time Warner Inc.

"Sinclair can bring a lot of leverage, including lower programming costs and operating costs," Sweeney said.

The acquisition also significantly increases Sinclair's radio holdings, he said. "We are extremely bullish on the radio stations," Sweeney said.

In the past two years, the company has more than doubled in size, and is planning more growth after Dallas-based Heritage is acquired. "We have been looking for acquisition opportunities and we haven't stopped looking," said David Amy, the company's chief financial officer.

Although Sinclair was founded in 1986, its origin is 25-year-old WBFF-TV Fox-45 in Baltimore, where it also owns WNUV-TV Channel 54. It now reaches 15 percent of American television households, including ABC, CBS, FOX, WB, and UPN affiliates. The radio group is already one of the 20 largest in the nation.

Its roster expanded by 10 TV stations last year when Sinclair bought St. Louis-based River City Broadcasting L.P. for $1.2 billion. River City also controlled all of the radio stations Sinclair now owns.

"It sharpens our focus. We are just meeting our strategy by making this acquisition," Amy said.

The company said it doesn't expect any regulatory opposition, but the company would be required to divest itself of one television station in Oklahoma City. "We don't expect to have any problem in selling that," he said.

In the spring, News Corp. agreed to buy Heritage, but said it would sell Heritage's TV and radio stations. Sinclair has been negotiating since then, Amy said.

Pub Date: 7/17/97

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