It owns such broadcast technology companies as Dielectric, is in the driver’s seat on the voluntary rollout of ATSC 3.0 digital broadcast standard implementation by the U.S. TV industry, and is presently looking toward a swift emergence from bankruptcy for its subsidiary that is home to Bally Sports regional sports networks, Diamond Sports Group.
Now, Sinclair Broadcast Group intends to implement a reorganization in which a new holding company, Sinclair Inc., would become the publicly traded parent of Sinclair Broadcast Group and its subsidiaries.
To help illustrate its pre- and post-restructuring plan, Sinclair provided the following graphic:
Perhaps the most noteworthy of the post-reorganization is the shift of Sinclair’s marketing technology and managed services Compulse business and The Tennis Channel from Sinclair Television Group to Sinclair Ventures, putting the two assets in the same corporate arena as private equity and real estate assets.
The new Sinclair Broadcast Group would be comprised of Sinclair Television Group and Diamond Sports.
“We believe the new structure will provide greater flexibility for creating value within the company,” explained Sinclair President/CEO Chris Ripley. “The new structure simplifies the corporate structure and improves the transparency of financial disclosures on the value drivers of the company.”
Ripley added that Sinclair also believes that other assets, “some of which are currently buried in the broadcast division,” can receive greater visibility outside the “broadcast” umbrella, while Sinclair Broadcast will become a broadcast-focused subsidiary “for which stockholders can better value its true performance.”
In short, Ripley said, “We believe a holding company structure can unlock unrecognized value and provide structural flexibility for the growth and monetization of our current and potential future media and non-media businesses.”
Investors weren’t immediately enthusiastic over the plan, with Sinclair shares down 4.6% to $16.38 as of 3:28pm Eastern on Monday. For shareholders, the reorganization would be fairly seamless, as each outstanding share of Sinclair Broadcast’s Class A common stock and Class B common stock would be exchanged automatically on a one-for-one basis for a share of Class A common stock and Class B common stock, respectively, of “New Sinclair.” New Sinclair’s Class A common stock is expected to continue to trade on the Nasdaq Global Select stock market under the ticker symbol “SBGI” just as Sinclair Broadcast’s Class A common stock does today.
Furthermore, the Sinclair reorganization is not expected to result in a change in the directors, executive officers, management or business of the public company, or to impact the timing of the declaration and payment of our regular quarterly dividends. And, the reorganization is not expected to result in gain or loss to Sinclair Broadcast’s stockholders for U.S. federal income tax purposes.
