Sinclair Broadcast Group Inc. said yesterday that it has abandoned its planned $33 million purchase of a public television station in Buffalo, N.Y.
Sinclair had hoped to run WNEQ-TV as a commercial channel rather than as a public television outlet. The Cockeysville company said it backed away from the deal because the station's owner, the Western New York Public Broadcasting Association of Buffalo, was moving too slowly in obtaining permission from the Federal Communications Commission to switch the station from a public to a commercial channel.
"We basically just got frustrated at how long it was taking," said a Sinclair official who spoke on condition of anonymity.
Richard Daly, senior vice president of Western New York Public Broadcasting, said his company has received a favorable ruling on the matter from the FCC and could get the required permission within four months, after a brief public-comment period.
Western New York owns two television stations in the market, WNEQ and WNED, both of which operate as noncommercial channels, though WNED has a license that would allow it to operate commercially.
Western New York wants WNED, the more powerful of the two stations, to remain as a noncommercial operation. The public broadcaster is asking the FCC for a go-ahead to simply transfer WNED's commercial license to WNEQ.
"That process is moving right along," said Daly. "We believe we will prevail ultimately on this thing. Obviously, Sinclair got impatient. What more is there left to say?"
Daly said no other potential buyers were lined up yet, but he did not seem worried about WNEQ's prospects. He said recent changes in television station ownership rules, which made it possible for a broadcaster to own more than one station in the same market, could raise the value of WNEQ.
"We think this gives us an opportunity to remarket the station under more favorable circumstances," Daly said.
Both parties said Sinclair will not have to pay a penalty for breaking off the deal, which was announced in August 1998.
Sinclair said the decision to cancel the purchase did not stem from the company's publicly stated intention to focus on reducing red ink and investing in stations it already owns.
However, Harry J. DeMott, an analyst with Credit Suisse First Boston in New York, said taking a pass on WNEQ fits this strategy.
"Basically, the company is in a mode where they want to get [current operations] running better. Adding new stations doesn't seem to make sense to them," DeMott said.
Sinclair gained 25 cents in yesterday's trading, closing at $10.75.