Sinclair Broadcast Stock Zooms As Company Touts “Unmatched” RSN Potency – Update

UPDATE with closing stock price. Sinclair Broadcast Group stock hit the stratosphere on Monday — bucking the day's downward trend on Wall Street to gain nearly 35% — as the company's CEO touted the company's deal to acquire the former Fox regional sports networks.
Shares in Sinclair rocketed to an all-time high of $60.48 today, on 15 times their normal trading volume. The broader markets closed down slightly amid trade and interest-rate anxiety.
He described the networks as offering an "unmatched portfolio of sports media rights." Such rights are expensive, of course — and their cost has capsized one RSN in Houston and done damage to another in LA due to disputes with pay-TV operators who balked at paying carriage fees hiked to cover the cost of rights.
Sinclair also has a position in YES. Taken together, the value of the 22 RSNs came up a bit short of the $15 billion to $20 billion range initially set forth by analysts. YES, the flagship of the RSN portfolio, was sold separately to the New York Yankees and Amazon in a deal that is still pending. The RSN deal, in which Byron Allen is also a participant, gives Sinclair rights to dozens of pro sports teams' games in 19 of the top 25 markets in the U.S.
In terms of rights agreements between individual RSNs and the teams whose games they carry, Ripley said the weighted average term of those deals is 11 years. "Fox did an excellent job of positioning the portfolio to maximize renewals."
Ripley declined to get into details about carriage terms, but he emphasized that the company did "significant due diligence" on the distribution aspect of the deal. He said the company determined that the outlook for RSN distribution is "very similar" to that of the company's local broadcast stations. "When we looked at the situation, we got comfortable with the strength of the product here and our relationships with the MVPDs and our ability to navigate through those renewals."
On a pro forma basis, the deal will more than double Sinclair's annual revenue to $6.7 billion, and triple its EBITDA to $900 million, Ripley said.
"We see tremendous opportunity for the RSNs in the continued adoption of digital streaming as well as the nascent legalized sports betting space," Ripley said during a conference call with analysts to discuss the transaction.
Nevertheless, Ripley argued that the staggered expiration of rights across the networks "materially de-risks the business." Sinclair and the Chicago Cubs recently announced the formation of a new RSN that will begin airing Cubs games in 2020.
Sinclair missed out on an earlier M&A opportunity when regulators scotched its planned purchase of Tribune Media in the summer of 2018. 1 spot among station owners.” /> Nexstar has a deal pending for Tribune, which would catapult it beyond Sinclair to the No.
Department of Justice, which stipulated the sale as a condition of its approval of the $71.3 billion acquisition of most of 21st Century Fox. The $10.6 billion acquisition from Disney gives Sinclair a key weapon in the streaming wars, CEO Chris Ripley argued during a conference call with analysts to discuss the deal, which was confirmed on Friday. Disney was obligated to sell the nationwide string of Fox RSNs as part of an agreement with the U.S. Deadline and other outlets had reported in recent months that Sinclair was in lead position during the auction. The Disney-Fox deal closed in March.

Tribune Company Shareholders Approve Acquisition By Nexstar

Nexstar's bid followed a long-gestating acquisition agreement with Sinclair Broadcast Group, the current No. 1 owner of local TV stations, which fell apart last summer over regulators' objections. If Nexstar closes the Tribune transaction as the company expects in the third quarter, it will leapfrog Sinclair to become the nation's top local broadcaster. Nexstar swooped in months later with a sweetened offer a notch above Sinclair's $3.9 billion price.
Unlike Sinclair, which assumed a fairly defiant stance during the regulatory process, Nexstar has indicated from the that it plans to divest of enough stations that the combined company will remain below the 39% national ownership cap. Sinclair has quickly turned the page since the Tribune experience, getting a piece of two regional sports networks, the long-established YES and a new one launching in 2020 with the Chicago Cubs, the team formerly owned by Tribune.” />
Tribune Media shareholders overwhelmingly approved the company's plan to be acquired by Nexstar Media Group during a special meeting today.
“We’re extremely pleased with today’s vote,” Tribune CEO Peter Kern said. “It confirms that our stockholders clearly recognize the significant value we expect to be delivered by this merger. We look forward to continuing our work with Nexstar to obtain the necessary regulatory approvals that will enable us to close this transaction later this year.”
The $4.1 billion proposal won the OK of more than 95% percent of the votes cast by the Company’s Class A common stockholders and Class B common stockholders, who voted as a single class. That turnout represents about 73% percent of the shares of the Company’s Class A common stock and Class B common stock outstanding as of the special meeting record date.

Tribune Stations Advise Charter Spectrum Viewers About New Year’s Eve Carriage Deadline

“The NFL playoffs begin Jan. 5 and we want football fans in our markets to be able to watch these
After closing the deal, Nexstar will become the No. Tribune Media, many of whose stations are in major markets like New York, LA and Chicago, is set to be acquired by Nextar in a pending deal valued at $4.1 billion. 1 owner of local TV stations in the U.S., surpassing Sinclair Broadcast Group, whose deal to acquire Tribune fell apart last summer.
While 2018 is pacing below 2017 in terms of total blackouts, it has yielded several high-profile impasses, including a bruising one between Starz and Altice last winter and two current standoffs between Dish Network and Univision and HBO.” /> Word of the Tribune-Spectrum carriage negotiations came just a day after Disney and Verizon FiOS publicly squared off.
Adding to the annual holiday-season angst around pay-TV carriage deals, Tribune Broadcasting stations are advising some 6 million subscribers to Charter's Spectrum cable service of a possible blackout.
Its national cable network, WGN America, would also be affected for 14 million customers. cable operator, with about 16 million residential customers. 2 U.S. Tribune said 33 stations in 24 markets could go dark across Spectrum systems if a deal cannot be reached by midnight on New Year's Eve. Charter is the No.
Charter offered a brief statement to Deadline: "We continue to negotiate with Tribune and hope to reach a fair agreement.”
“We’ve offered Spectrum fair market rates for our top-rated local news, live sports and high-quality entertainment programming, and similarly fair rates for our cable network, WGN America. games and root for their favorite teams—we want to reach an agreement with Spectrum,” said Tribune Media spokesman Gary Weitman in a press release. Spectrum has refused our offer.”

Nexstar Buys Tribune For $4.1B, Becoming No. 1 Local TV Group – Report

Last summer, Sinclair's long-pending deal to acquire Tribune for $3.9 billion unraveled in the face of heightened regulatory scrutiny from the FCC. Sinclair and Tribune then filed dueling lawsuits over the merger's meltdown, with Tribune seeking $1 billion in damages.
households, the cap is under review by the FCC, with many station groups arguing that it should not exist at all given that local TV is competing with tech giants for viewers' attention. Currently set at 39% of U.S. Appearing at the NAB Show New York in October, Nexstar CEO Perry Sook said, Sook said the likes of Facebook, Google and Amazon “are unfettered with no restrictions to reach 100% of the country.”
While it was overshadowed by the Sinclair-Tribune merger, another major tie-up has combined Gray Television and Raycom Media. Fox, whose profitable station portfolio will be one of the linchpins of the company after most of it is sold off to Disney in the coming weeks, is also seen as being an active dealmaker on the station front in 2019.
After emerging from bankruptcy in late 2012, Tribune spun off its newspaper assets in 2014. Peter Liguori, a well-established TV executive known for his role in creating FX, ran the company until 2017, passing the baton to current CEO Peter Kern.
Moderate voices fear the elimination of the cap could prompt the same kind of consolidation that effectively killed the radio business. Many observers expect the cap to be relaxed to about 50% of households, but the Republican majority on the FCC leaves open the possibility the cap will be eliminated.
The merger came just months into the presidency of Donald Trump, who has close ties to Sinclair and has vowed to deregulate many industry sectors. The massive scope of Sinclair's 2017 deal to acquire Tribune prompted debate in the regulatory and TV sectors about the longtime limit on ownership of stations.
When contacted by Deadline, a Tribune spokesman declined comment, describing the Reuters report as "speculation." Nexstar did not immediately respond to requests for comment.
Nextar outbid private equity firm Apollo Global Management with an all-cash offer that values Tribune at around $46.50 per share, according to Reuters. Tribune shares ended trading on Friday at $40.26.
Nexstar may not face quite the same backlash as Sinclair, given it is less of a lightning rod for criticism and keeps a lower profile, but when the numbers come out activists will likely still mobilize.
The acquisition, first reported by Reuters, would vault Nexstar ahead of Sinclair Broadcast Group to make it the top local TV station owner in the U.S.
The transaction is expected to be formally announced by Monday, Reuters said.” />
It also has WGN America, which is carried in some 77 million homes, and a stake in the Food Network. Chicago-based Tribune has 42 local TV stations — notably in major markets like New York, LA and Chicago — with reach to about 50 million households.
Nexstar Media Group, which has grown in just 20 years from a single Pennsylvania radio station into a local TV colossus, has reportedly struck a deal to acquire Tribune Media for about $4.1 billion.
Although its market capitalization is $3.8 billion, it has arranged for debt financing through several banks, the Reuters report said. Texas-based Nexstar owns, operates, programs or provides sales and other services to 171 television stations around the country.

Sinclair Counter-Sues Tribune Media Over Failed Local TV Merger

The undoing of the deal was primarily a set of “sidecar” arrangements designed to keep Sinclair under the legal limit for total stations. Those deals, however, set off alarms with regulators because the new owners of the stations would have been closely affiliated with Sinclair and therefore enabling them to exert control over the stations they were supposed to have divested under the law. In an extraordinary development, the two companies earlier this summer ditched their planned $3.9 billion combination after the Federal Communications Commission raised 11th hour concerns about it.
Sinclair Broadcast Group has filed a counter-suit against Tribune Media in Delaware Chancery Court, accusing the Chicago-based media company of seeking a “windfall” with its previous legal claim.
"We are likewise disappointed that Tribune, through its meritless lawsuit, is seeking to capitalize on an unfavorable and unexpected reaction from the Federal Communications Commission to capture a windfall for Tribune.” "We were extremely disappointed that the Tribune transaction was terminated," said Sinclair CEO Chris Ripley in a statement.
In the counter-complaint, Ripley added, the company demonstrates that “we fully complied with our obligations under the merger agreement and worked tirelessly to close the transaction.”
The suit seeks $1 billion as compensation for allegedly "spectacular" breach of contract. Sinclair maintains that the suit Tribune filed after the deal was called off is nothing but a cynical ploy to extract profit from an unfortunate turn of events.
PE firm Blackstone and 21st Century Fox had submitted a bid for Tribune before the company opted for Sinclair.” /> 2 station group Nexstar or private equity firms likely to take a look. Tribune remains in play, with No. President Donald Trump has lamented the demise of the tie-up, given that it snuffed out a conservative media voice. Sinclair, already the No. 1 station group, would have grown far larger and infiltrated major markets like New York, Chicago and LA had regulators given their OK.
In Tribune's view, Sinclair knew that the divestiture plan it presented to the FCC was dubious but proceeded anyway, dooming the transaction. "Tribune looks forward to holding Sinclair accountable in court," the company said.
Tribune issued its own statement in response to the counter-claim, calling it “entirely meritless.” The filing, the company said, is “simply an attempt to distract from its own significant legal exposure resulting from its persistent violations of Tribune’s contractual rights."

FCC Chairman Says Inspector General Finds No Favoritism In Review Of Sinclair-Tribune Merger

The combination would have brought Sinclair — with its must-run packages of commentary — to 72% of American households.” />
Pai said he merely called on the FCC to update its outdated media ownership regulations to match the realities of the modern marketplace. He said he has long viewed allegations of favoritism as "absurd," adding, "today’s report proves that Capitol Hill Democrats’ politically-motivated accusations were entirely baseless.”
“I’m pleased that the Office of Inspector General has concluded that there was ‘no evidence, nor even the suggestion, of impropriety, unscrupulous behavior, favoritism towards Sinclair, or lack of impartiality related to the proposed Sinclair-Tribune Merger,'" Pai said in a statement.
FCC Chairman Ajit Pai said the inspector general found no evidence of impropriety or favoritism in the agency's review of the proposed Sinclair-Tribune Merger.
The full document notes that after conducting a comprehensive investigation that included reviewing emails, phone records and visitor logs, the inspector general found no evidence of impropriety, favoritism towards Sinclair.
Reps. Frank Pallone and Elijah Cummings cited recent FCC decisions around local ownership that would benefit Sinclair, which had reportedly struck a deal to afford favorable coverage of President Donald Trump.
Hunt singles out Pai's recommendation to send the deal through a lengthy administrative review process, citing  "serious concerns" about the merger."  The inspector general called that decision —widely viewed as a deal-killer — as "evidence that the Chairman did not engage in any favoritism toward Sinclair."
"When asked specific questions as to whether any actions that ultimately may have inured to Sinclair’s benefit were influenced by any promises or threats either by Sinclair or any other entity, including President Trump or the Executive Office of President, the Chairman unequivocally replied in the negative," Inspector General David Hunt wrote, adding, "We have found no evidence that would lead us to question these responses."
Trump criticized the decision as "Sad and unfair."
Two House Democrats had asked the FCC's inspector general to examine whether Pai was biased in favor of Sinclair Broadcast Group, which was seeking regulatory approval of a $3.9 billion acquisition of Tribune.