Sinclair Broadcast Group | Principles & Practices

By Zack Phillips

Sinclair Broadcast Group Logo (courtesy of www.sbgi.net) [1]

Sinclair Broadcast Group, Inc.
10706 Beaver Dam Road
Hunt Valley, Maryland 21030
(410) 568-1500
http://www.sbgi.net

ABOUT THE COMPANY [2]:

Sinclair Broadcast Group, Inc. (SBG), founded in 1986, currently owns, operates, programs, or provides sales services to 163 television stations in 77 markets across the United States. Sinclair’s television group reaches approximately 38.7% of U.S. television households and includes FOX, ABC, MyTV, CW, CBS, NBC, Univision, and Azteca affiliates. SBG also owns four radio stations in the Seattle-Tacoma market.

Sinclair Broadcast Group’s Network Logos (courtesy of http://www.sbgi.net) [1]

Sinclair fully owns and operates 46 stations while the rest are operated under local market agreements [3]. As of 2006, Sinclair became the largest FOX and MyNetworkTV affiliate group, the second largest ABC affiliate group, and the third largest CW affiliate group in the country [4].

Sinclair also directly, or through its Ventures subsidiary, makes equity investments in strategic companies. In turn, SBG currently holds equity interests in Acrodyne Technical Services, Dielectric, Sterling Venture Partners, Allegiance Capital Limited Partnership, Patriot Capital II, and Ring of Honor Wrestling Entertainment [5].

KEY EXECUTIVES [6]:

[7] David Smith, President and CEO (courtesy of www.mije.org)

David Smith – President, Chief Executive Officer
David Amy – Executive Vice President, Chief Financial Officer
David Bochenek – Vice President, Chief Accounting Officer
Steven Marks – Vice President, Chief Operating Officer, Television Division

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For more information on Sinclair Broadcast Group’s Executives, click here.

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OWNERSHIP AND DEVELOPMENT HISTORY [4]:

Julian Sinclair, Founder (courtesy of www.sbgi.net) [1]

In 1971, Julian Smith founded the Chesapeake Television Corporation which later changed its name to Sinclair Broadcast Group in 1986. In 1990, David Smith and his three brothers bought the remaining company stock from their parents and, in 1995, Sinclair became publicly listed. From 1996-98, Sinclair became the nation’s largest non-network owned commercial television broadcasting company after acquiring River City Broadcasting, Heritage, Sullivan Broadcasting, and Max Media. In 1999, Sinclair led a broadcasters’ petition to the FCC to give broadcasters the choice between 8VSB or COFDM standard, allowing for digital signals to reach more locations. In 2007, Sinclair and 8 other broadcasters and networks founded the Open Mobile Video Coalition (OMVC) to assess mobile TV business applications.

FINANCIAL INFORMATION [8]:

For the third quarter of 2013 (June 30th to September 30th), SBG’s net broadcast revenues increased 34.7% to $303.0 million, versus $225.0 million in third quarter of 2012. Operating income decreased 7.1% to $72.8 million, compared to $78.4 million in the prior year period, and net income totaled $36.3 million compared to $26.2 million in the prior year period. In the report, Sinclair also stated that diluted earnings per common share were $0.36 compared to $0.32 in the the third quarter of 2012.

RECENT NEWS:

Sinclair Broadcast Group Announces Plans for $90 Million Acquisition Sinclair Broadcast Group (SBG) announced on September 25, 2013 that it plans to buy eight television stations from New Age Media. The $90 million acquisition includes markets in Pennsylvania and Florida and will include CBS, NBC, FOX, MyNetwork, and CW affiliates. President and CEO of SBG, David Smith, commented, “We are excited to be adding the New Age stations to our portfolio, growing our presence in Pennsylvania and Florida, and further diversifying our affiliation mix [as] we continue to capture operating efficiencies and scale, as well as increase our cash flow for ongoing opportunities” [9].

$115.35 Million Purchase from Titan Television Broadcast Group
Titan Television Broadcast Group Logo (courtesy of www.titanbroadcast.com) [10]

As of October 3, 2013, Sinclair Broadcast Group has completed its purchase of four television stations from Titan Television Broadcast Group with an agreement to provide sales and services to two other Titan stations. The $115.35 million deal included three Fox affiliates, a CBS affiliate, and two CW affiliates. This is only one of the purchases recently made my Sinclair in order to secure a larger number of stations across a greater number of markets. After all deals are completed, Sinclair will have a hand in 163 television stations in the United States [11] [12].

Department of Justice Reviewing Proposed Allbrittron Acquisition In late July of 2013, Sinclair announced its plans to acquire seven of Allbritton Communications Company‘s stations for a price of $985 million. However, on October 7, 2013, Sinclair released a statement that the US Department of Justice (DOJ) has requested “additional information” from both companies regarding the purchase. Sinclair warned in its statement that this “second request” would likely extend the waiting period for approval on the proposed transaction and that it will most likely be completed by the second quarter of 2014 [13].
US Department of Justice Seal (courtesy of www.justice.gov) [14]
Third party reports have argued that the second request might mean that the FCC has petitioned to deny the transaction as it “would give Sinclair too much power in those markets, including over retransmission consent negotiations with cable operators” [15]. In a separate petition to deny at the FCC, the American Cable Association stated that, if the transaction were to be approved, “Sinclair would have the ability to negotiate retransmission consent for both the CBS and ABC affiliates in Harrisburg and the Fox and ABC affiliates in Charleston” [16].

Sinclair Exposed by Non-profit Media Group, Free Press
Free Press Logo (courtesy of www.freepress.net) [17]
On October 24, 2013, Free Press published an article containing quotes from Research Director, Derek Turner regarding Sinclair’s use of shell companies to create loopholes in order to circumvent FCC rules [18]. One of Sinclair’s executive vice presidents, Barry Faber, then responded to the article stating that all of Sinclair’s actions are completely legal, fully disclosed, and abide by all FCC rules and regulations. Faber continued to explain that Free Press was misinformed and that all of Sinclair’s acquisitions have benefited the local communities from which the stations were bought [19]. On November 6th, Free Press released a second article in The Baltimore Sun specifically targeting Sinclair’s shell company, Cunningham Broadcasting. The article explains in detail how Sinclair uses Cunningham to sidestep FCC rules and, in turn, harms local communities and eliminates jobs [20].

Joseph Koff named Vice President of Training and Development On November 7, 2013, Sinclair Broadcasting Group announced Joseph Koff as their newest Vice President, handling training and development for the company. According to a statement released by Chief Operating Officer, Steven Marks, Koff created Sinclair’s first ever “sales boot camp” and in-house training program called Sinclair University. Koff has personally taught both training sessions and has delivered extraordinary results. Koff has worked at SBG since 2003 and has served as Chief Operating Officer of Sinclair’s wrestling franchise, Ring of Honor [21].

SOURCES:

[1] SBG Logo

[2] SBG Company Profile

[3] SBG Station Index

[4] SBG Company History

[5] SBG Business Ventures

[6] SBG Executives

[7] David Smith Photo

[8] SBG 2013 Q3 Financial Report

[9] The Baltimore Sun: Sinclair Plans to Purchase from New Age Media

[10] Titan Television Broadcast Group Logo

[11] The Baltimore Sun: Sinclair’s Purchase From Titan