Sinclair Climbs After Issuing Station Plan That Keeps WPIX

(Bloomberg) -- Sinclair Broadcast Group Inc. rose after releasing a revised plan to sell TV stations and satisfy regulators vetting its $3.9 billion purchase of Tribune Media Co., saying it would keep New York’s WPIX and sell other stations to friendly buyers.

The transactions are aimed at gaining regulatory approval for the Tribune deal and are expected to be completed when that purchase closes, Sinclair said on Tuesday. The company is seeking approval from the U.S. Federal Communications Commission as well as antitrust regulators at the Justice Department.

The development is a “much needed public sign of progress,” said Daniel Kurnos, an analyst at Benchmark Co., adding that Sinclair probably wouldn’t publish the list without implicit approval of the plan from the Justice Department. Sinclair may generate at least $1.5 billion to $2 billion in proceeds from the sales, he said.

Sinclair jumped 4.7 percent to $30.25 at 2:40 p.m. in New York trading after rising as high as $30.40. Tribune added 1.4 percent to $38.95 after climbing as much as 3.3 percent.

Conservative Commentator

Flagship station WGN in Chicago would go to a business associate of a top Sinclair executive, while other outlets would be sold to a company controlled by the estate of the executive’s mother. Howard Stirk Holdings, owned by conservative commentator Armstrong Williams, would buy some stations, as would New York-based hedge fund Standard General LP led by Soo Kim. In addition, Meredith Corp. would buy one station.

Sinclair and 21st Century Fox Inc. are in advanced discussions for Fox to buy seven local TV stations from Sinclair in Seattle, Denver, Cleveland, Sacramento, San Diego and Salt Lake City and a Tribune station affiliated with the CW network in Miami, according to a person familiar with the matter.

Sinclair didn’t list a potential sale of WPIX, the New York station that it earlier proposed divesting to satisfy regulators.

With the Tribune transaction and related divestitures Sinclair would grow to 215 television stations in 102 markets. The Maryland-based broadcaster is known for its conservative leanings, including commentaries by Boris Epshteyn, a former aide to President Donald Trump.

National Cap

As proposed in May, the deal would have extended Sinclair’s reach to more than 70 percent of U.S. homes, exceeding the national limit of 39 percent. Sinclair said the divestitures proposed Tuesday would bring it into compliance with the national cap. That calculation assumes it can count the audience at some stations on a discounted basis, a procedure approved by the FCC but under legal attack.

“While we continue to believe that we had a strong and supportable rationale for not having to divest stations, we are happy to announce this significant step forward in our plan to create a leading broadcast platform with local focus and national reach,” Sinclair Chief Executive Officer Chris Ripley said in a news release.

The FCC will probably take public comments on the proposed divestiture, Matthew Schettenhelm, a Bloomberg Intelligence analyst, said in a note Wednesday. Scrutiny can take weeks and could stretch into the third quarter, Schettenhelm said.

Sinclair had planned to complete the deal by the end of 2017 but now sees it closing by June. The company has had to increase divestitures in order to push the transaction through.

Sinclair said it would share the operations of WGN as well as the three stations proposed for sale to Howard Stirk. Those three are in Seattle, Salt Lake City and Oklahoma City, and Sinclair also would retain outright ownership of a station in each city. Such sharing arrangements have been criticized as end runs around ownership restrictions.

Related: Sinclair Surges After Clearing Hurdle With Station Divestitures

Moelis & Co. served as Sinclair’s financial adviser on the TV station deals. They include the sale of WGN, KDAF in Dallas to Cunningham Broadcasting Corp., and KUNS in Seattle to Howard Stirk. Meredith is also buying KPLR in St. Louis, a CW affiliate, for $65 million.

WGN’s proposed purchaser is WGN-TV LLC, Sinclair said Tuesday. In an earlier filing, it identified that buyer as belonging to a Maryland executive, Steven Fader, whose car dealership is controlled by Sinclair Executive Chairman David Smith. Cunningham is owned by the estate of Carolyn Smith, the mother of Sinclair’s controlling shareholders, including Smith.

Tina Pelkey, an FCC spokeswoman, declined to comment.

--With assistance from Catherine Larkin

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net, Gerry Smith in New York at gsmith233@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Nick Turner at nturner7@bloomberg.net, Virginia Van Natta, Rob Golum

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