Moody’s rates Sinclair’s acquisitive streak


SBG / Sinclair Broadcast Group
Two deals have brought in boatload of new television stations into the Sinclair fold, to be operated under the auspices of a subsidiary, and although debt will be incurred to make it all happen, Moody’s Investors Service notes that it will barely be noticeable.

The two deals are taking Sinclair into smaller DMAs than those in which it typically operates. It is getting four stations from Cox and the right to operate one more; and it is buying all 18 of Barrington Broadcasting’s stations along with the rights to operate an addition six stations.

Sinclair has formed Chesapeake TV to house the stations that are coming in, a move designed to acknowledge the differing needs of the small market outlets.

MIS notes that it will have minimal impact on Moody’s leverage. It was projected to be in the 5.0x range, and the two current deals are not expected to add any more than 0.2x. That will keep it well below the 5.5x level at which MIS’s says it would consider a downgrade.

As is stands, its ratings remain unchanged: Its Corporate Family Rating remains at Ba3, and its rating remains Stable.

“Moody’s believes risks associated with rapid expansion and serial acquisitions will be mitigated by Sinclair’s decision to set up a new subsidiary, Chesapeake TV, with additional management and retained staff from Barrington to focus on small market operations and acquisitions. Steven Marks, COO of Sinclair, will continue to manage Sinclair’s existing mid-sized market station group while Steve Pruett, a longstanding broadcasting executive, has been appointed COO of Chesapeake TV to focus on small market operations and expansion,” stated Carl Salas, Moody’s VP and Senior Analyst.
MIS applauded Sinclair’s decision to bring in management staff capable of handling the new acquisitions.