Sinclair sells stations in Midwest to Sunrise

Transaction fits effort to cut small-market units acquired in buying spree

April 01, 1999|By Mark Ribbing | Mark Ribbing,SUN STAFF

Sinclair Broadcast Group Inc. continued its slim-down yesterday, selling three Midwestern television stations to Sunrise Television Corp. for $81 million in cash.

Baltimore-based Sinclair is trying to get rid of some of the radio and TV stations that it picked up during a recent acquisition binge that turned the company into an industry heavyweight but also saddled it with some holdings that it couldn't afford to keep.

The stations it is selling to Sunrise -- KGAN-TV of Cedar Rapids, Iowa; WICS-TV of Springfield, Ill.; and WICD-TV of Champaign, Ill. -- were obtained in one of those purchases, a $310 million multi-station deal with Guy Gannett Communications.

"Given that we hadn't begun to operate them yet and didn't have as much investment in terms of money in these stations, it made sense to go ahead and sell them to Sunrise," said Patrick J. Talamantes, Sinclair's treasurer.

Talamantes said the value of Sinclair's divestitures and canceled transactions this year is about $142 million.

Sinclair's new less-is-more approach is the result of financial necessity. The company reported a net loss of $16.9 million for 1998, after posting a $10.6 million shortfall the previous year. Sinclair blamed the red ink largely on the acquisitions, and has set about shedding stations that don't fit the company's overall strategy.

The three stations Sinclair is selling to Sunrise seem to fall into that category. Sinclair has traditionally sought TV stations in markets ranked 15 to 75, while the Springfield-Champaign market ranks 82nd and Cedar Rapids is 88th.

Sinclair has focused on collecting affiliates of the newer, more youth-oriented Fox, UPN and WB networks rather than the more established Big Three -- ABC, CBS and NBC. KGAN is a CBS affiliate, while WICS-TV and WICD-TV are NBC stations.

In Baltimore, Sinclair owns Fox affiliate WBFF and programs the WB Network's WNUV.

The sale to Sunrise is subject to Federal Communications Commission and Justice Department approval, and is expected to close by late spring. The Guy Gannett transaction, which was announced in September, is slated to close around the same time.

When all pending deals are completed, Sinclair will own or program 59 TV stations in 39 markets and 51 radio stations in 10 markets.

Paul T. Sweeney, an analyst with Salomon Smith Barney Holdings Inc. in New York, said the transaction was "a good deal" for Sinclair, and added that more sell-offs and cancellations are on the way. "Another $50 million [worth] is what we're looking for in the near term, and we think it may even be above and beyond that," he said.

Sunrise, a St. Petersburg, Fla.-based affiliate of Dallas investment company Hicks, Muse, Tate & Furst Inc., will have 16 TV stations in 12 markets once all pending transactions are concluded.

Pub Date: 4/01/99

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