Sinclair Says It's Not Looking at Cable Acquisitions Beyond Tennis Channel
Beyond its planned purchase of Tennis Channel, Sinclair isn't eyeing other cable acquisitions in the immediate future, Chief Financial Officer Chris Ripley said Thursday. "We've looked extensively through the cable network universe to find this acquisition," he said in a conference call on the $350 million acquisition (see 1601270066). "We turned over every rock. We always look at every opportunity [but] we're not on the hunt like we were before this to find an opportunity."
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Sinclair has been exploring cable for several years, looking at either building a cable network around its local news or sports content or buying an existing one, Ripley said. As one of the few independent sports networks left, he said, Tennis Chanel was an opportunity to build into something more akin to peer network Golf Channel. Golf Channel has close to 80 million subscribers, Sinclair said, while Tennis Channel has 30 million, and the broadcaster has signed agreements with multichannel video programming distributors that the broadcaster said would raise that to 50 million on the deal's close. That number could grow, Ripley said, because there are "a number of MVPD negotiations to come."
"We definitely looked at a number of other channels, and Tennis Channel really stood out," Sinclair General Counsel Barry Faber said. "We wanted to buy something under-distributed." As an independent network, Tennis Channel "is in a difficult situation," Faber said. "When you couple it with our [MVPD] relationships, they're much more willing to increase the distribution." Sinclair executives also said they're working with MVPDs on channel placement issues, to get Tennis Channel included in broader subscription packages and in the general sports area of the channel lineup. Wells Fargo analyst Marci Ryvicker wrote investors Wednesday recalling Sinclair's 2014 start of American Sports Network (see 1407180027) and its announcement last year of starting multichannel science-fiction network Comet with MGM. She said "diversification into other types of TV networks ... are great strategic moves for continued [Sinclair] financial growth."
Sinclair said it expects to close on Tennis Channel in Q1, though the deal needs antitrust regulatory approval. Bruce Sokler, chairman of the antitrust section at Mintz Levin, which represents cable and other clients, said he didn't see significant antitrust issues in the transaction. "It should comfortably clear review," he told us.
Tennis Channel has been in a legal fight over its carriage on Comcast since 2010, when it filed a carriage complaint against the cable company. Tennis Channel has a petition before the U.S. Court of Appeals for the D.C. Circuit asking it to vacate a 2015 order in which the FCC denied the complaint (see 1501280059). Sinclair executives said getting Tennis Channel added to other MVPDs' networks could help pave the way to getting increased Comcast distribution. Comcast didn't comment. Tennis Channel will remain a stand-alone channel separate from Sinclair's American Sports Network, "though there will be synergies between the two," Faber said.