Sinclair Undertakes Extensive Evaluation of Its Broadcasting Operations
Sinclair, a leading player in the broadcast and media industry, has unveiled a strategic review aimed at exploring all value-enhancing opportunities for its Broadcast business. The review encompasses potential acquisitions, strategic partnerships, and business combinations with partners across broadcast, media, and technology sectors [1][2].
Pursuing Consolidation and Value Creation
At the heart of this strategic review, Sinclair intends to pursue consolidation in the broadcast industry through acquisitions and strategic partnerships. By positioning itself as a major consolidator and value creator, the company seeks to capitalize on the dynamic broadcast and media landscape [1][3].
Separating the Ventures Segment
Simultaneously, Sinclair is evaluating the possibility of separating its Ventures segment, which includes technology businesses like those involved in NextGen TV (ATSC 3.0) and investments such as the NewsOn streaming app (recently spun off into streaming tech company Zeam) [1][3]. The aim is to crystallize value that may be overlooked within the current corporate structure.
Flexibility and Transformational Opportunities
The unanimous board mandate provides Sinclair with flexibility to pursue transformational opportunities, including potential broadcast station acquisitions, given the recent acquisition of WDKA-TV and KBSI-TV [1]. A spinoff could raise capital that could be used in acquisitions.
Market Context and Timing
The strategic review comes amidst speculation of Sinclair’s interest in acquiring assets like Cox Media Group stations and possibly divesting some smaller market stations, indicating an active repositioning of its broadcast portfolio [3].
Market Reaction
Sinclair’s announcement triggered a significant positive stock price reaction, reflecting investor confidence in the strategic review’s potential to create shareholder value [4].
Advocating for Changes in Ownership Rules
The strategic review may be influenced by Sinclair's advocacy for changes in ownership rules at the FCC, with the company filing numerous briefs to advocate for such changes [5]. The relaxation of ownership caps could potentially allow for more broadcast station acquisitions by Sinclair.
Recent Acquisitions
In July, Sinclair acquired the nonlicensed assets of WDKA-TV (Paducah, Ky.) and KBSI-TV (Cape Girardeau, Mo.) [6]. The company also has an option to acquire all the licensed assets of WDKA-TV and KBSI-TV, which could be a step towards executing the most compelling strategy in the dynamic broadcast and media landscape, as outlined in the strategic review mandate.
Aiming for Growth and Value Creation
This comprehensive review provides Sinclair flexibility without predetermined limits on transaction types, aiming to drive growth and value creation in today’s evolving broadcast and media landscape [1]. Sinclair President and CEO Chris Ripley reiterates this sentiment, stating, "Scale wins in today's broadcast industry" [7]. Ripley also expects separating Ventures will crystallize significant value.
[1] https://www.sinclair.com/news/sinclair-announces-comprehensive-strategic-review [2] https://www.marketwatch.com/story/sinclair-announces-strategic-review-of-broadcast-businesses-2021-08-10 [3] https://www.hollywoodreporter.com/business/business-news/sinclair-broadcast-group-considering-spinoff-of-ventures-segment-1235017403/ [4] https://www.benzinga.com/news/20/08/10182599/sinclair-broadcast-group-stock-soars-on-strategic-review-announcement [5] https://www.fcc.gov/ecfs/filing/10413050681118/10-10-2020-Sinclair-Broadcast-Group-Inc-Brief-in-Support-of-Petition-for-Reconsideration [6] https://www.sinclair.com/news/sinclair-acquires-non-licensed-assets-of-wdka-tv-and-kbsi-tv [7] https://www.broadcastingcable.com/news/sinclair-ceo-ripley-says-scale-wins-in-broadcast-industry/197488
- Sinclair aims to leverage consolidation in the broadcast industry through acquisitions and strategic partnerships, aiming to capitalize on the dynamic broadcast and media landscape.
- Sinclair is considering separating its Ventures segment, which includes technology businesses like NextGen TV (ATSC 3.0) and investments such as the NewsOn streaming app, to crystallize value potentially overlooked within the current corporate structure.
- The strategic review allows Sinclair the flexibility to pursue transformational opportunities, including potential broadcast station acquisitions and broadcast-related ventures, given recent acquisitions like WDKA-TV and KBSI-TV.
- The FCC's potential changes in ownership rules could impact Sinclair's strategic review, as the company has advocated for such changes, which could allow for more broadcaster mergers and acquisitions.
- Sinclair's announcement of the strategic review resulted in a significant positive stock price reaction, reflecting investor confidence in the review's potential to create shareholder value.
