COMMENTARY

Is Sinclair Looking to Back Out of Local TV? Not Entirely

• by Wayne Friedman , Staff Writer, 9 hours ago

Sinclair Inc. -- one of the biggest U.S. TV station groups -- wants to get smaller, perhaps by 30%, according to reports.

Is this a sign of bigger moves to come for the company?

Some time ago, Sinclair CEO Chris Ripley mused that the company might consider selling undervalued businesses, “de-leveraging” assets. And in what may be one hint, he said: “We have no sacred cows.”

Well, there has been one sacred cow for the company: TV stations. Long before buying regional sports networks (Fox Corp), or even a cable sports network (Tennis Channel), Sinclair cut its media teeth with local TV station outlets.

Sinclair has around 185 U.S. TV stations in 86 markets -- second only to Nexstar Media Group, which has over 200 stations in 117 markets.

Reports suggest Sinclair would still retain 70% of those TV stations, as well as its majority stake in its beleaguered Diamond Sports, its regional cable TV sports network group. 

It was in 2019 that it bought the former Fox owned regional sports network group (through Disney) for $10 billion.

Now, five years later, it is a shell of what it was -- due to consumer cord-cutting and pay TV distributors' disinterest in carriage for these networks which yield slim to no profit margins. 

This all means that Sinclair needs to be more sharply focused on identifying the most and least productive business across the entire company.

TV stations for sale are estimated to comprise a broad mix of major TV network affiliates (Fox, CBS, ABC, NBC, and the CW) in mid-size markets that could fetch some $1.6 billion.

We all know the trend lines here: Massive changes in the linear TV landscape are occurring for both national and local TV outlets.

Cord-cutting has not just affected all cable TV and broadcast networks, but TV stations of all types.

A major focus for local TV stations -- especially those that are struggling -- can be the crucial distribution and carriage fees.

Also, as core TV advertising has been a weak growth business, TV stations are increasingly dependent on the bump those outlets get from political advertising revenues every other year (Midterm and Presidential election years) which can result in healthy quarterly financial reports.

For Sinclair, slimming down its legacy TV business to the most productive TV stations then makes sense.  

The next question is what those TV stations will mean to their associated broadcast TV networks, amid their own issues when it comes to cord-cutting. 

The question is how fast change will take place. The forest of live, linear TV isn't just slowly thinning -- big branches are being taken down.