Sinclair says it wants to lead consolidation moves as it begins review of broadcast assets

Sinclair Inc. has announced it’s kicking off a strategic review of its broadcasting business, which could lead to spinning off or selling off some of its holdings.

“To optimize value creation across its portfolio, the Company will simultaneously evaluate separating Ventures through a spin-off, split-off, or other transaction. This dual-track approach reflects the Board’s commitment to unlocking the full potential of both businesses, each of which has distinct growth profiles and value drivers,” reads a statement from the company.

“The Company will evaluate all value-enhancing opportunities, including acquisitions, strategic partnerships, and business combinations, with potential partners in the broadcast and the broader media and technology ecosystem,” the announcement continues. 

The announcement also notes it will “simultaneously evaluate separation of ventures.”

Sinclair, which is one of the largest operators of local TV stations in the country, owns 185 stations in 85 markets. It also owns other assets, including Tennis Channel, YES Network and a 50% stake in Marquee Sports Network, along with multicast networks such as Comet, Charge, TBD and The Nest.

It also owns sales, marketing and technology assets. 

“Scale wins in today’s broadcast industry, and we intend to lead that consolidation,” said Chris Ripley, president and CEO of Sinclair, in the statement. “Our Broadcast business’s industry-leading performance positions us as the partner of choice for value creation. Simultaneously, we expect separating Ventures will crystallize significant value that the market has overlooked within our current structure, giving us even more flexibility to drive our broadcast strategy forward.”

Those specific statements are clearly aimed at the growing speculation that the FCC will relax rules about station ownership.

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Any changes to ownership caps, if enacted, are likely to trigger a flurry of consolidation, including the creation of more duopolies and triopolies in the U.S. 

Sinclair’s announcement isn’t a surprise — and some industry watchers have been anticipating such a move, including the possibility that other groups may ultimately snap up the stations.

Should the FCC update its rules, Sinclair could maximize the potential value of its station portfolio since many groups will be eager to double-up — or even triple-up — wherever possible in order to cut costs by combining duplicative departments and cutting jobs.

Meanwhile, Nexstar Media Group, the current top station owner in the U.S., is reportedly in talks to acquire Tegna, which is the sixth biggest owner of TV stations. 

Although it’s not clear how long Sinclair’s plans have been in the works, the timing, coming just a handful of business days after news of a potential Nexstar-Tegna deal, is worth noting. 

There are still a variety of possibilities how Sinclair could — or could not — play a role in either a potential Nexstar-Tegna deal or the broader landscape of consolidation. Much of that likely hinges on how the FCC rules are updated and how they are ultimately defined and interpreted.

For example, at one point it would been hard to image a scenario when stations from Nexstar, Tenga and Sinclair could come together to form a sort of mega-owner group, but there are also signs that the broadcasting industry may be in for a unprecedented change.

It’s also possible that stations could be divided up and sold off to other groups in bundles that make sense to fit their ownership maps, perhaps with some properties going to less well-known names.

Analysts have also noted that at some of Sinclair’s sports operations could be prime assets to get sold off. 

Again, all of these possibilities are still just possibilities — and Sinclair’s announcement could ultimately lead to either nothing being done or spinning off certain assets into a separate company that would still be controlled by Sinclair, such as Comcast’s Versant spinoff. 

That said, Sinclair’s debt and the uncertain economy of linear broadcasting are significant issues and the company itself pointed out that’s keen to act on at least some type of consolidation strategy. 

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