Fox To Acquire Seven Stations From Sinclair Broadcast Group

A deal has been reached between 21stCentury Fox and Sinclair Broadcast Group for the former to acquire seven stations belonging to the latter at a price of $910 million. In order to get federal approval for its $3.9 billion bid to acquire Tribune Media, Sinclair Broadcast Group has to sell 23 television stations.

Last year in December 21stCentury Fox reached an agreement to sell some of its assets to Walt Disney. The acquisition of the television stations from Sinclair is therefore seen as a move aimed at strengthening what will be left of Fox after the deal with Disney. It is envisaged that what will remain of Fox after the divestiture will consist of Fox Sports, Fox News and the Fox Broadcast Network.

Federal approval

Other buyers of Sinclair and Tribune television stations who have been announced include Cunningham Broadcasting Corp, Howard Stirk, Meredith Corp and Standard Media Group which is a Standard General affiliate. According to Sinclair the deal with Tribune could be concluded in late Q2 or early Q3. The deal will however have to get approved by the U.S. Department of Justice and the Federal Communications Commission.

At the same time Sinclair has revealed that profits for the first quarter fell year-on-year. This was attributed to weaker advertising revenues relative to the Q1 in 2017 when the Super Bowl and the Olympics on several of the company’s stations. Additionally there was a decline in motor vehicle ads compared to last year’s highs.

Revenue stream diversification

In the quarter income came in at $43.1 million versus $57.2 million which was generated last year. While income fell revenues increased by over 6% from $626.9 million which was recorded in the same period last year to $665.4 million. According to the chief executive officer and president of Sinclair, Chris Ripley, subscriptions revenue and affiliate fees now make up between 45% and 50% of the media revenue of the company.

“At a time when audience fragmentation and uncertainty about the economy are on the rise, investors should take solace knowing almost half our revenues are sheltered from advertising volatility,” said Ripley during an earnings call.

After acquiring Tribune and selling 23 television stations it is expected that Sinclair will be in a position to reach around 62% of TV households in the United States while still falling under the 39% federally mandated ownership cap. Without the sales of the stations Sinclair would have possessed control of around 233 TV stations.

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