Is Fox Threatened By Sinclair's Reach?

COMMENTARY

• by Wayne Friedman , Staff Writer, August 7, 2017

Sinclair Broadcast Group may have federal regulators on its side about a possible mega TV-station-group merger. But its business partners -- and competitors -- may give it a harder time. Cue 21st Century Fox.

The Fox Broadcasting Network reportedly wants to change its affiliate associations with 26 Sinclair TV stations -- and strike a deal with a smaller TV station group, ION Media Networks.

Why? Insiders say a potential $3.9 billion merger between Sinclair and Tribune Media could be competitive trouble for Fox-owned TV stations -- as well as other Fox affiliates where Sinclair has other network affiliate deals.

Is Fox short-sighted? Fox -- like all TV networks -- depends on the steady local TV promotion, which Sinclair provides.

Dealing with ION could just be a negotiation ploy with Sinclair, perhaps to extract a far better Fox affiliation agreement.

But if that doesn’t work, Fox might do what Sinclair is doing: Buy more TV stations. Perhaps ION stations.

Sinclair is in the driver’s seat -- to an extent. The FCC is already relaxing U.S. TV station ownership limits under the Trump Administration. Add in news of a possible Fox affiliate switch, in addition to Sinclair’s stock being down almost 14% for the week with its Friday close.

Much has been made of Sinclair’s conservative bent -- especially with its on-air news commentators.

TV news content is a major ad-revenue generator for TV stations. Sinclair’s growing size and efforts around TV newscast efficiencies have led people to speculate that Sinclair wants to start a national TV cable network to compete with Fox News Channel.

All this is a nice business-story conspiracy.

But even for the biggest media players, that's a tough call. It is an expensive proposition, especially now that the pay-TV business seems to be contracting, with less subscribers and skinny TV bundles.

Where would Sinclair get those traditional pay-TV subscribers? Does it have any business allies on the pay-TV side that could help? At best, it could start a modest internet/digital TV channel.

If Fox is upset about Sinclair’s growing leverage, then other TV networks groups -- which also have many TV station affiliate agreements with Sinclair -- are too.

Sinclair is the largest U.S. TV station group, with 173 outlets; the Tribune deal will add another 42 stations. That means more TV-station fireworks to come.