NEW YORK — It is well established that Sinclair Inc. is reviewing what the future shall be for its collection of broadcast television stations, placing them under “a comprehensive strategic review” on August 11. With rumors swirling that Gray Media is a natural fit as a buyer, the Baltimore-headquartered company that owns Dielectric and is leading the march toward ATSC 3.0 digital broadcast standard conversion in the U.S. has just invested in a significant number of shares in The E.W. Scripps Co.
A SEC filing disclosed early Monday (11/17) shows that a series of transactions commenced October 6, when Sinclair Inc. purchased 56,472 at a weighted average price of $2.4016 per share. On every date since then, with the exception of November 5, through last Friday (11/14), additional shares in “SSP” were snapped up by Sinclair.
On November 7 alone, some 1,840,824 shares were acquired by Sinclair, at a weighted average price of $2.5592. On the other dates, various amounts of shares were purchased.
Total it up, and ahead of Monday’s Opening Bell for U.S. financial markets, Sinclair had acquired 6,275,204 shares in its broadcast TV peer.
Already, speculation as to why Sinclair has invested in Scripps has emerged. One independent broadcast television station owner tells RBR+TVBR that it appears to be a “hostile takeover” and comes after Scripps, led by President/CEO Adam Symson, was considering an acquisition of Sinclair, the company helmed by Chris Ripley.
Yet, there’s a wild card — Scripps could voluntary seek bankruptcy protection, should it seek to fend off any sort of unwanted acquisition by Sinclair, the TV station owner posits.
A report at The Wall Street Journal‘s website posted early Monday quotes a Sinclair representative as stating “constructive talks” have been held in recent months between Sinclair and Scripps, while suggesting the shares in “SSP” were purchased to add pressure on Symson and the C-Suite to agree to a deal.
By the Opening Bell, a second SEC filing from Sinclair offered more color as to its actions since early October.
“Recent industry consolidation and intensifying competition reinforce the Reporting Person’s view that further scale in the broadcast television industry is essential to address secular headwinds and compete effectively with larger-scale big-tech and big-media players, as well as major broadcast groups,” Sinclair told the SEC, adding that combining Sinclair with Scripps “provides the ability to compete successfully for advertising share, critical programming, and distribution economics through enhanced local and national scale, coupled with disciplined execution of synergies.”
Sinclair added that, based on prevailing trading multiples and more than $300 million in expected annual synergies estimated by Sinclair, holders of “SSP” would receive an ownership stake in the combined company that Sinclair estimates would be worth approximately three times the average trading price of Scripps common stock over recent periods.
The proposed combination, Sinclair concluded in the second SEC filing, would be structured to require no external financing “as the combined company would maintain each company’s respective debt and preferred capital structures. As a result, the transaction would avoid significant refinancing costs while meaningfully reducing [Scripps]’s leverage through the realization of synergies and lowering future refinancing risk.”
At 7:40am Eastern, Scripps responded to Sinclair’s disclosure that it acquired 8.2% of its Class A non-voting shares. “Scripps’ board of directors and management are focused on driving value for all of the company’s shareholders through the continued execution of its strategic plan,” the company said. “The board and management are aligned on doing only what is in the best interest of all of the company’s shareholders as well as its employees and the many communities and audiences it serves across the United States.”
“Scripps’ board of directors has and will continue to evaluate any transactions and other alternatives that would enhance the value of the company and would be in the best interest of all company shareholders. Likewise, the board will take all steps appropriate to protect the company and the company’s shareholders from the opportunistic actions of Sinclair or anyone else.”
Scripps added that the company’s board “has and will continue to evaluate any transactions and other alternatives that would enhance the value of the company and would be in the best interest of all company shareholders. Likewise, the board will take all steps appropriate to protect the company and the company’s shareholders from the opportunistic actions of Sinclair or anyone else.”
Should Sinclair be successful in acquiring Scripps, it would present the second proposed mega-merger in the broadcast TV industry to regulators since President Trump returned to the White House and Brendan Carr became FCC Chairman with a pledge to “delete, delete, delete” old and unnecessary regulatory policy while modernizing other rules. Broadcast TV rule reform is widely anticipated, which led Nexstar Media Group to reach an agreement with TEGNA to merge. Paperwork for that transaction is expected to be filed with the FCC today, now that the LMS is in working order following the government shutdown and its inaccessibility for more than a month.
For Sinclair, Scripps presents it with a broadcast TV network — Ion Television — and sports rights agreements with the WNBA and three NHL teams, including the Stanley Cup Champion Florida Panthers; digital multicast networks including Court TV; the Scripps News digital offering; and a host of broadcast television stations including WCPO-9 in Cincinnati, its flagship property and an ABC affiliate.
In pre-market trading on Monday, Scripps shares were up by 24% to $3.80, a valuation last seen in early July. Sinclair shares were up by nearly 2%, to $16.39, ahead of the Opening Bell for Nasdaq.
