Bloomberg News

Sinclair, Tribune Deals Said Not Affected by FCC Change

September 25, 2013

A change in U.S. rules to restrict the growth of television-station groups wouldn’t affect pending acquisitions such as those proposed by Sinclair Broadcast Group Inc. (SBGI:US) and Tribune Co. (TRBAA:US), people familiar with the matter said.

A rule being written at the Federal Communications Commission wouldn’t apply to existing or pending combinations of TV stations, said two agency officials who asked not to be identified because the matter hasn’t been made public.

The FCC is to vote tomorrow on the rule proposed by the agency’s acting chairwoman, Mignon Clyburn, a Democrat. The agency would then take public comments until a final vote that would probably take place under Tom Wheeler, who awaits Senate confirmation as FCC chairman.

Justin Cole, an FCC spokesman, in an e-mail declined to comment.

Clyburn wants to do away with a regulatory discount that calculates audience reach of some TV stations at 50 percent of others when assessing compliance with ownership limits. Congress set a limit for a company’s reach at 39 percent of the national TV audience.

Buyers of broadcast TV stations, which are collecting more fees from cable systems, proposed deals totaling more than $3 billion in the second quarter, more than any comparable period since 2007, according to data compiled by Bloomberg.

Pending Deals

Deals needing FCC approval include those from Tribune, which wants to almost double its holdings to 42 stations by buying 19 outlets from Local TV Holdings LLC. Sinclair on July 29 said it would raise its station total to 149 after deals with the Allbritton family, Fisher Communications Inc. and two others. Today Sinclair announced an agreement to purchase the broadcast assets of eight stations owned or served by New Age Media.

The Tribune acquisition would bring the company’s holdings to 43 percent of the national audience without the discount that is proposed for elimination, and Sinclair’s reach with its deals would grow to 38 percent, Paul Gallant, Washington-based managing director at Guggenheim Securities LLC, said in a Sept. 23 note. The FCC will probably advance the proposal at its meeting in Washington tomorrow, Gallant said.

Clyburn’s proposal, issued to her two fellow commissioners on Aug. 1, would eliminate the so-called UHF discount, a relic from the era when TV stations, which now use digital signals, sent their broadcasts via old-fashioned analog transmitters.

UHF Discount

With the old technology, UHF stations -- those on channels 14 to 51 -- couldn’t send their signals as far as those on lower channels. To compensate, the FCC cut by 50 percent the audience each UHF station can reach, compared with a lower-channel station in the same location.

The discount means owners can buy more UHF stations without exceeding the cap.

With the UHF discount, Tribune would remain “well under 30 percent” after its purchase of Local TV, Eddie Lazarus, general counsel of Chicago-based Tribune, said in a July 1 conference call.

Sinclair, based in Hunt Valley, Maryland, in its July 29 statement announcing the Allbritton deal said the transaction would bring its holdings to 21.9 percent of the national audience with the UHF discount, and 38.2 percent without.

Clyburn leads the FCC following resignations as the Senate considers Wheeler and a Republican nominee. In a February statement welcoming an examination of minority ownership in media, Clyburn said such a study “could shed greater light on any potential harms that may result from increased media consolidation.”

A Republican-majority FCC in 2007 loosened media-ownership rules over Democratic objections. After a court threw out that change, a Democratic FCC chairman in 2011 proposed relaxing the rules, and the agency is still considering the measure.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • SBGI
    (Sinclair Broadcast Group Inc)
    • $27.09 USD
    • 0.27
    • 1.0%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus