April 20, 2017 at 10:37 am #174044
Here is an update on the Sinclair/Tribune talks by Bloomberg.
Sinclair Broadcast Group Inc. is aiming to acquire Tribune Media Co., owner of TV stations in big media markets including New York, Chicago and Miami, for a per-share price in the high $30s, according to people familiar with the matter.
Sinclair is working to finalize a deal on or before the same day Tribune reports first-quarter earnings, which is slated for the week of May 8, said the people, who asked not to be identified discussing private information. Shares of Chicago-based Tribune closed at $37.70 on Tuesday, giving it a market capitalization of about $3.3 billion.
Shares of Tribune jumped as much as 6.1 percent to $40.01 in New York, while Sinclair rose 5.1 percent.
Final terms of a transaction between Sinclair and Tribune haven’t been agreed upon, and a deal could still fall apart, the people said. A Tribune spokesman declined to comment. Sinclair didn’t respond to requests for comment.
With more friendly rules governing ownership concentration in broadcasting expected from the U.S. Federal Communications Commission, Tribune may have options beyond Sinclair. Other buyers are interested in Tribune, according to one person familiar with the matter. As earlier reported by Bloomberg, Nexstar Media Group Inc. has considered a bid for Tribune. Nexstar has a history of laying in wait for a potential deal, striking an agreement to acquire Media General Inc. in 2015 only after Media General had announced plans to merge with Meredith Corp.
Tribune, which owns 42 local-TV stations and the WGN America cable network, could even emerge as a buyer itself in what is expected to be a media merger spree in 2017.
But a theoretical marriage between Sinclair and Tribune, two of the largest local TV station owners in the U.S., hangs on a vote Thursday by the FCC to restore the so-called UHF discount — which would make it possible for the combined entity to stay under a cap that limits coverage of the country by a single station owner to 39 percent.April 21, 2017 at 10:38 am #174072
Update Sinclair has Bonten Television for $240 Million
The deal will add Bonten Media Group’s 14 stations in eight markets that reach approximately 1% of the U.S. TV households. Sinclair’s total coverage now stands at 39.6%.
By Harry A. Jessell
TVNewsCheck, April 21, 2017 9:39 AM EDT
Sinclair Broadcast Group today announced the acquisition of 14 stations in eight markets from Bonten Media for $240 million.
The deal takes advantage of the FCC decision yesterday to restore the UHF discount in calculating station group coverage for purposes of the FCC’s national ownership cap on station group coverage — 39% of TV households.
“We look forward to welcoming the Bonten employees into the Sinclair family and are pleased to be growing our regional presence in several states where we already operate,” said Chris Ripley, president-CEO of Sinclair. “We believe our economies of scale help us bring improvements to small market stations, including investments in news, other quality local programming, and multicast opportunities with our emerging networks of Comet, Charge! and TBD.”
Including the Bonten station acquisitions, all previously announced acquisitions and pro forma for expected synergies, Sinclair’s 2015 and 2016 media revenues would have been $2.236 billion and $2.620 billion, respectively, the company said. “The $240 million purchase price represents a 6.7x multiple and is expected to be on average approximately $25 million accretive to our free cash flow on an annualized basis.”
The Bonten stations add about 1% to Sinclair’s total reach, Sinclair said.
Without the discount, the deal would put Sinclair above the cap at 39.6%. But with the cap, it remains well below the cap at around 25%.
Veteran broadcaster Randy Bongarten, backed by the Diamond Castle private equity firm, formed Bonten Media in 2007 by purchasing Bluestone Television for $230 million.The old Bluestone station still form the backbone of the group.
Through duopoly partner Esteem Broadcasting, Bonten added Fox affiliates in Greenville, N.C., and Chico-Redding, Calif. Esteem owns the stations, but Bonten operates them through joint sales and shared services agreements.
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Not included in the deal is WFXI, one of Esteem’s two Fox affiliates in Greenville. WFXI was sold in the FCC incentive auction for $42.1 million.April 21, 2017 at 10:56 am #174076April 22, 2017 at 11:25 am #174115
Update on the Sinclair deal with Tribune they have a May 8 deadline for deal go through.April 22, 2017 at 11:41 am #174116
May 8th deadline is floating around for the Sinclair/Tribune deal to go through.May 1, 2017 at 11:01 am #174234
Fox Steps in the ring to get some of the Tribune stations.
Umm how many stations does Fox have to sell to get some of the Tribune stations in question? My guess seems to be that Fox wants KCPQ Seattle because its in a NFC Market and Fox would need to sell KTBC, WOFL and WOGX for the deal to go through.
Twenty-First Century Fox is in talks with private equity firm Blackstone to launch a bid to acquire Tribune Media, according to a report in the Financial Times on Sunday evening.
Per the report, which cites two sources familiar with negotiations, Fox and Blackstone would form a joint venture to acquire the conglomerate. According the Times, Blackstone would provide funding for the venture, with Fox contributing its own portfolio of stations.
The news comes after reports emerged earlier this month that Sinclair Broadcast Group, which has made no secret of its desire to acquire more stations, was interested in buying Tribune. It’s part of another wave of broadcast TV station mergers expected now that the FCC is on a course to loosen ownership restrictions.
James Murdoch, CEO of 21st Century Fox, previously told investors that his company was unlikely to embark on a big acquisition, even if the FCC cap on the number of stations a company can own was relaxed in the Trump administration. Meanwhile, a Bloomberg report last month said that Fox was looking to thwart Sinclair’s potential takeover of Tribune Media. The Blackstone arrangement would allow Fox to expand its station holdings without much cash outlay.
The bid would mark an offensive move from Fox, as Sinclair is already a large owner of Fox affiliates. If the Sinclair were to acquire Tribune, it would give the company control over 28% of Fox affiliates, according to Bloomberg. That would give Sinclair significant leverage in negotiations with the network over reverse compensation terms.
Tribune Media includes such assets as WGN America and Tribune Broadcasting, which owns or operates 42 local TV stations. Word of the interest in a Tribune transaction comes as Fox is already shepherding a $15 billion takeover of pay-TV broadcaster Sky, though the report from British regulators on the bid has been postponed until after the upcoming U.K. general election.May 7, 2017 at 2:58 pm #174352
Update Sinclair is close to a deal to Tribune broadcasting.May 7, 2017 at 5:04 pm #174355
Update more news outlets report on the deal between Sinclair and Tribune.
Sinclair Broadcast Group Inc. is close to buying Tribune Media Co., a deal made possible after the Federal Communications Commission voted last month to ease a limit on TV-station ownership in the U.S.
Sinclair would pay about $45 a share, or about $4 billion, for the Chicago-based broadcasting company, according to people familiar with the talks who asked not to be named because the discussions aren’t public. Tribune’s closing price on Friday was $40.29, giving it a market value of $3.5 billion. While an agreement may be announced as early as Monday, the deal could still fall apart.
The acquisition of Tribune would give Sinclair TV stations in big media markets like New York, Chicago and Miami, strengthening its hand in negotiations with pay-TV distributors and major broadcast networks. The larger scale also would help the combined company face down online competitors vying for a piece of the local advertising pie.
21st Century Fox Inc., with funding from Blackstone Group LP, had been planning an offer for Tribune but in the end didn’t submit a bid, according to a person familiar with the matter. Nexstar Media Group Inc. also was preparing an offer, according to people familiar with the matter.
Gary Weitman, a spokesman for Tribune Media, and representatives from Nexstar and Fox declined to comment. Emails to Sinclair weren’t returned.
A potential marriage of two of the largest local TV station owners in the U.S. was made easier last month when the FCC restored a rule that allows TV station groups to count just half of their coverage area for Ultra High Frequency stations to comply with a 39 percent nationwide cap set by Congress.
The FCC’s vote reversed a 2016 decision by the agency during the Obama administration. New Chairman Ajit Pai, a Republican, criticized the earlier action because it effectively tightened ownership limits without considering whether to raise the national cap.
The issue is a relic of days when UHF stations — broadcasting on channels 14 and higher — used signals that didn’t reach as far as stations assigned lower-numbered channels. That disappeared with the switch to digital TV in 2009.
The impetus for a Sinclair-Tribune deal came earlier this year when the FCC eased confidentiality requirements for companies selling airwaves in an auction. TV stations are voluntarily giving up airwaves in the sale for use by mobile providers, and are getting paid for doing so.
Despite their respective size, Sinclair and Tribune have little overlap in the locations of their stations. Sinclair has 173 stations in 81 markets, including affiliations with Fox, ABC, CBS and NBC, and reaches 24 percent of U.S. TV homes with the UHF discount reinstated. Tribune has 42 stations reaching 26 percent. With the UHF discount reapplied, they cover 42 percent of the country, implying a likelihood of some divestitures, according to a Bloomberg Intelligence analysis.May 7, 2017 at 9:26 pm #174357
Update in the case Fox Got some of the Tribune stations.
21st Century Fox CEO James Murdoch told securities analysts in February that Fox was not much interested in growing its station portfolio. “We really like the shape of our station business right now.”
As Sean Spicer progenitor Ron Zeigler would say, that statement is “inoperative.”
We learned this week that Fox believes the shape of its station business is too small and so is forging a joint venture with the Blackstone private equity outfit to make a bid for Tribune Media and its 42 stations. Tribune hung out the for-sale sign a year ago.
The news upset the widespread expectation, much in vogue at NAB last week, that the ever-acquisitive Sinclair Broadcast Group would sweep in and scoop up Tribune so that it would have the major market outlets it needs to fulfill its national ambitions.
So, why is Fox suddenly hot for Tribune?
Wrong question. Fox is not hot for Tribune; it’s hot for Tribune’s 14 Fox affiliates stretching from Seattle (DMA 14) to Greensboro, N.C. (DMA 46). Collectively, they reach 13.5% of TV homes.
If Fox can pull off this deal, its lineup of O&Os would swell to 31 stations covering about half of all TV homes, well within the bounds of the FCC’s newly expanded national ownership limits.
Buying Tribune would give Fox and Blackstone the chore of spinning off the 28 non-Fox stations it doesn’t want. They can be roughly divided into two groups: The traditional Tribune stations, a string of major-market, news-producing stations affiliated mostly with the CW topped by WPIX New York, KTLA Los Angeles and WGN Chicago, and a bunch of Big Four network affiliates in 50-plus markets.
So, let’s reframe the question. Why is Fox hot for 14 more O&Os?
After news of Fox’s play for Tribune broke, the research firm of MoffettNathanson put out a note that says that Fox has good offensive and defensive reasons for scarfing up the Fox affiliates.
On the offensive side of the ledger, it says, Fox would create “incremental value” for itself from the cost synergies of owning more stations and from exposure to more football markets. The Tribune Fox affiliates would give the network entree into six additional NFL markets, including two (Seattle and Milwaukee) for which it holds the Sunday NFC home-team rights.
In addition, MoffettNathanson says, the joint venture with Blackstone, which would absorb Fox’s current stations, would shield parent 21st Century Fox from the volatile ad market and put the slow-growing station assets “below the line.”
I would add another even bigger factor: retrans. According to the back of my envelope, Tribune’s 14 Fox affiliates reach 15.5 million homes. Let’s say 80% or around 12 million are MVPDs subs.
If Fox buys the affiliates, it could get $2 per month from each of the 12 million subs. That works out to $24 million a month or $288 million a year.
But if Sinclair gets the affiliates, it will collect the $2 and Fox will get only half the money through reverse comp.
Here’s where we get into the defensive rationale. If Sinclair wins Tribune, it becomes a massive Fox affiliate group with 52 affiliates covering around 28% of TV homes. That will give Sinclair tremendous leverage to push back on reverse comp and other matters. Maybe Fox ends up on the short end of the retrans split.
Rupert and the boys will suddenly have to consult with David Smith every time they want to make a move. Better to deal with the Blackstone bean counters.
MoffettNathanson says Fox has other reasons to keep Sinclair from getting too big. Because of those major market CW stations, a Sinclair-Tribune merger essentially creates a new national broadcaster outlet with big ideas for programming and new ATSC 3.0-enabled services like datacasting and targeted advertising.
Smith has been talking for years about creating a national news service that would compete with Fox News Channel and, with Tribune, he’ll have all the pieces he needs to do it. MoffettNathanson also suggests that Sinclair-Tribune may have enough weight to compete for NFL rights when they come up in a few years.
So, if Fox buys Tribune, it will prevent Sinclair from becoming the affiliate group from hell and another national TV rival.
There would still be the question of Tribune’s 28 non-Fox stations. Fox would be able to find plenty of buyers to spin off the 50-plus Big Four affiliates. But what of the CWs, particularly in the major markets? Who other than Sinclair wants them?
Nexstar? Perhaps. Like Sinclair, it likes to buy stations, but, unlike Sinclair, it has no visible strategy for putting major market stations to work.
As half owner (with Time Warner) in the CW, CBS certainly has an interest in what becomes of Tribune’s CW affiliates.
I’d be curious to know whether the CW has the right, in the event of a sale, to shift its affiliation in New York, Los Angeles, Dallas and Miami from the new owner of Tribune to the CBS duopolies in those markets. I’d also be curious to know whether CBS is interested in buying Tribune’s CW affiliates in Denver; St. Louis; Portland, Ore. Hartford, Conn.; Norfolk, Va.; and New Orleans.May 8, 2017 at 11:03 am #174361
Update Sinclair has Tribune and this means that Sinclair returns to Sacramento but this time on KTXL 40.May 9, 2017 at 10:58 am #174374
Update Sinclair Talk shows heading to Los Angeles, New York and Chicago.May 9, 2017 at 10:59 am #174375
Now Sinclair’s politics are at play here.May 10, 2017 at 6:01 pm #174397
Update Nexstar does a day after quarterbacking over the deal with Tribune and Sinclair.May 11, 2017 at 9:54 pm #174414
Sinclair’s impact in the Seattle DMA.
Sinclairs impact on the Chicago DMA.May 22, 2017 at 12:12 am #174594
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