Sinclair to shed stations in 10 markets after $6.6B Tribune Media merger

Sinclair
Sinclair would have to sell all stations in some markets to get below the current 39% ownership cap.

Under current ownership rules, Sinclair Broadcast Group’s acquisition of Tribune Media will require the new company to divest of stations in 10 markets, according to regulatory filings.

According to TVNewsCheck’s Harry Jessel, overlaps between the two major station groups would put the new company more than 6% above the 39% of U.S. TV homes that is the maximum allowed. The companies said Sinclair would have to sell all stations in some markets to get below the cap. Affected markets include Seattle, St. Louis, Portland, Oregon, Salt Lake City, Oklahoma City, Greensboro, North Carolina, Grand Rapids, Michigan, Harrisburg, Pennsylvania, Richmond, Virginia, and Des Moines, Iowa.

One fundamental premise of the deal announced in May, in which Sinclair will pay $3.9 billion in cash and assume $2.7 million in debt to acquire Tribune, was the likelihood of a Republican-controlled FCC easing station ownership rules. On paper, the combined group will have more than 233 stations in 108 markets, including 39 of the top 50.

The local rules allow ownership of a "duopoly," meaning two stations in a market, but only if one is not among the market's four top-rated stations and the market has eight other independently owned stations.

In the filings, the companies insist the deal is in the public interest. "[It] will increase the merged company’s capability to serve the public by increasing its operational efficiencies, allowing Sinclair to upgrade the stations’ facilities, expand the stations’ local coverage (including local news), offer even greater value to multichannel video distributors, and increase syndicated and original programming offerings."

One key variable in where the total number of stations settles out is Sinclair’s requests to retain Tribune’s satellite stations (full-power stations that extend the signals of other stations) and declare that certain stations can be deemed “failing.” In order to get a failed station waiver to operate a duopoly, the failed stations must meet certain criteria. The criteria include low viewership, poor financial condition and an inability to attract a buyer who would operate the station on its own.

The scope of the deal and the conservative political leanings of Sinclair have prompted scrutiny and criticism in many quarters. Thus far, the megadeal has been cruising through early regulatory review and the companies have said they hope to close it by the fourth quarter.