Sinclair renews Fox affiliations, has option to buy local station

Hunt Valley broadcaster receives option to buy Fox's MyNetwork station

May 15, 2012|By Lorraine Mirabella, The Baltimore Sun

Sinclair Broadcast Group Inc. will renew Fox Broadcasting Co. affiliations with 19 of its television stations in an agreement that also allows Sinclair to purchase a Fox-owned station in Baltimore.

Under the agreement with Fox, Sinclair has the option to buy WUTB, Fox's MyNetwork station in Baltimore, for up to $52.7 million between July 1 and March 31, 2013.

Sinclair negotiated for the option to strengthen its position as owner of a Fox affiliate in Baltimore, one of the broadcaster's most important markets, David Smith, Sinclair's chief executive and president, said in a statement.

The Hunt Valley-based company owns flagship station and Fox affiliate WBFF-TV, known as Fox 45.

"For us, a pivotal aspect of the agreement was securing our [Fox] affiliation on WBFF-TV," Smith said. "Our Fox affiliate in Baltimore is one of our most important television assets, and over the years the station has built a strong local brand."

Smith added that before reaching the agreement with Fox, Sinclair believed that affiliation was "at risk."

But ownership of WUTB "would solidify WBFF's position as a Fox affiliate in Baltimore in the long term," he said.

If the company exercises its option, it would then have to assign or sell that option to a third party because of federal rules governing television station ownership in a given market, said David Amy, Sinclair's chief financial officer.

Owning an option on a second Baltimore Fox affiliate would give Sinclair "the additional bonus of possibly creating a duopoly (and eliminating a tough competitor) in one of SBGI's most important markets," Marci Ryvicker, a senior analyst for Wells Fargo, wrote in a report on Tuesday.

Radio and television broadcasters refer to a duopoly as a single company that controls two or more stations in the same city.

In return, the agreement says, Fox can purchase Sinclair's MyNetwork/CW stations in up to three of four markets: Raleigh, N.C.; Las Vegas; Cincinnati; or Norfolk, Va., at fair market value. If Fox exercises its option in any of those markets, Sinclair's maximum purchase price for WUTB would be reduced by $25 million, the agreement says.

The agreement to renew all of Sinclair's current affiliations with Fox from Jan. 1 through Dec. 31, 2017, allows the company to continue as the largest Fox-affiliated broadcaster in the United States, Smith said.

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