Sinclair deal puts it among TV giants Channel 45 owner reaches into Midwest

April 12, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

Baltimore's Sinclair Broadcasting Group catapulted into the power elite of American media companies yesterday as it agreed to acquire St. Louis-based River City Broadcasting L. P. in a deal valued at $1.2 billion.

Sinclair said the acquisition, its first billion-dollar deal, will make it the seventh-largest TV broadcast group in the United States. The announcement came 25 years to the day after Baltimore's WBFF (Channel 45) became the first of Sinclair's chain of TV stations to go on the air, said Chief Executive Officer David Smith.

The River City transaction will put the company well on the way to its goal of becoming one of the nation's largest broadcasting companies.

"We will not stop here," Mr. Smith said. "The opportunity to have literally more than 100 television stations is a potential objective in the next few years."

The acquisition, one of the first major broadcasting deals made possible by the Telecommunications Act of 1996, will bring River City's 10 television stations and 34 radio sta-

tions into the Sinclair fold. Counting Sinclair's five other pending station acquisitions, the deal will create a company with 29 television stations.

The addition of River City will also bring Sinclair some welcome diversification. Sinclair's broadcast properties are mostly independents or affiliates of second-tier networks such as Fox and UPN. River City brings three ABC affiliates and one CBS station into the mix.

The deal was hailed by investors and analysts. Sinclair's stock soared 18.3 percent, closing at $32.25, up $5.

"It's a really exciting acquisition, and not just from an investor's standpoint but for Baltimore," said Daniel F. Dent, president of D. Dent & Co., an investment company that owns 8.9 percent of Sinclair's publicly traded stock. "I think it's going to be a major company in Baltimore."

In fact, low-key Sinclair has quietly grown into one of the city's largest publicly traded companies. With yesterday's gain, its market capitalization soared past $1 billion, more than Crown Central Petroleum and Alex. Brown Inc. combined. Even before yesterday's announcement, it was the largest media company based in Maryland.

With the River City acquisition, the new Sinclair will be a company whose component parts generated $448 million in revenues in 1995 -- $188 million of which were accounted for by the St. Louis company.

"This is certainly a watershed event in the history of the company," said Paul Sweeney, a telecommunications analyst with Wheat First Butcher Singer in Richmond, Va. "Not only are they acquiring great stations, but they're acquiring a great management team."

Under the terms of the agreement, River City founder and chairman Barry Baker will become chief executive of Sinclair Communications, a wholly owned subsidiary of Sinclair Broadcast Group that will operate all of the company's broadcast properties. Along with most of River City's top executives, Mr. Baker will relocate to Baltimore.

Mr. Baker, 43, will also receive a seat on the holding company's board, but the company will remain firmly in the grasp of the Smith family, which will control about 75 percent of the stock.

Mr. Smith said yesterday that the expansion will not budge Sinclair from its plebeian headquarters on TV Hill. "We're not interested in erecting anything but big numbers," said Mr. Smith, whose disdain for the trappings of corporate power verges on the extreme. The 44-year-old CEO has been known to meet important investors while dressed in torn blue jeans.

Mr. Smith said yesterday that Mr. Baker will run the company's day-to-day operations while he will focus on strategic opportunities, including technological innovations that are expected to bring sweeping changes to the broadcast industry over the next decade.

Pub Date: 4/12/96

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