Is Sinclair Seriously Seeking To Woo Tribune?

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Is a major player in Charm City wooing a big media company in the Windy City?


According to Reuters, the answer is yes.

The news orgtribune-media-2017anization on Wednesday afternoon noted that Sinclair Broadcast Group has approached Tribune Media about a potential merger.

Reuters quoted “people familiar with the matter,” noting that any combination would be dependent on the FCC‘s expected relaxation of national ownership limits and a possible review of its subcap regulations.

Tribune Media declined to respond to Reuters’ request for comment; Sinclair did not respond by midday Wednesday (3/1).

Like the speculation regarding Sirius XM and Pandora Media and a possible return to unification talks, which now seem moot, Reuters said that, according to its anonymous sources, “the discussions between the companies are preliminary and there is no certainty they will lead to any deal.”

Investors saw past this, sending Tribune Media shares skyrocketing 8.3%, to $37.38, on Wednesday — even as the company reported Q4 earnings that missed the estimates of three analysts surveyed by Zacks Investment Research.

Sinclair is the much larger entity, with 173 television stations in 81 markets. Tribune has 42 O&Os — but it has WGN America and Tribune Studios. With broadcast television companies looking to expand their programming through their own content, Tribune Studios could be the key to Sinclair’s primary desire to merge with the Chicago-based company. Then, there is Tribune’s stake in the Food Network, which could also prove enticing to Sinclair.

Tribune is already above the national cap, with 44% U.S. Household reach; Sinclair has 38% U.S. Household reach.

The news comes as Peter Liguori, who took the reins as President/CEO of Tribune Media Co. in January 2013, stepped down from his role Wednesday (3/1) with the release of the company’s Q4 2016 and full-year earnings. A successor has not been named as of yet.

TRIBUNE MISSES WITH Q4 RESULTS

The owner of WGN-AM 720 in Chicago, newly unaffiliated WGN-9 in the Windy City, and such CW affiliates as WPIX-11 in New York and KTLA-5 in Los Angeles, saw its total operating revenue grow to $529.63 million, from $478 million during Q4. Three analysts surveyed by Zacks expected $596.1 million.

This led Tribune to swing to net income of $18.95 million (22 cents per share), from a net loss of $380.93 million (-$4.07) in Q4 2015.

Adjusted for one-time gains, Tribune’s EPS in Q4 was 85 cents, compared to 56 cents in the year-ago period.

The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 90 cents per share.

For FY2016, Tribune saw total operating revenue of $1.95 billion, up from $1.8 billion in 2015.

Its Adjusted EBITDA for 2016 came in at $531.1 million, up from $439.7 million.

Operating expenses, namely those seen in programming and in general and administrative sales, were down in Q4.

Meanwhile, retransmission revenue in Q4 came in at $89.2 million, up from $74.3 million in the year-ago period.

Tribune did not break out its political revenue but noted that Q4 revenue “was driven by a $68.3 million increase in net political advertising revenue.”


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