Settling its litigation with a former top executive and rival Emmis Communications Corp., Cockeysville-based Sinclair Broadcast Group Inc. said yesterday that it will sell six St. Louis radio stations to the Indianapolis company for $220 million.
The agreement, which allows Sinclair to maintain control of KDNL-TV, its St. Louis television station, completes the company's move out of the radio business.
"We think it is terrific," said Patrick Talamantes, Sinclair's chief financial officer. "It allows us to get the lawsuit behind us and focus on our television operations."
The dispute between the companies began in June 1999 when Barry Baker, former head of Sinclair's radio and TV operations, sold to Emmis for an undisclosed sum his options to buy all of Sinclair's St. Louis broadcast operations.
Baker still held those options, granted in his employment contract, when he left Sinclair in February 1999 to become president and chief operating officer of USA Networks Inc. He resigned that position Wednesday.
During negotiations between the companies, an appraisal of the St. Louis properties, including the TV station, valued them at $366.5 million, a price Sinclair said was too low.
Sinclair then filed a $40 million lawsuit in Baltimore County Circuit Court against Emmis and Baker, charging that Baker's deal with Emmis was invalid because the terms of the employment contract were too vague.
Baker and Emmis responded in March with a $300 million counter-suit against Sinclair for holding up the agreement.
"The fact that we were able to retain the St. Louis television station was a win, from our perspective," Talamantes said. He said the company believes that the $220 million price for the radio stations was fair.
"I think it is a fair deal for everybody," said Jeff Smulyan, chairman and chief executive of Emmis. The sale is subject to Federal Communications Commission and Department of Justice approval.
Talamantes said Sinclair plans to use the after-tax proceeds of about $175 million to reduce its debt. Sinclair owns or operates 61 TV stations in 40 markets.