Sinclair Broadcast Group continues to work with Tribune Media Co. to win approval of its controversial proposed $ 3.9 billion merger despite striking a potentially declining roadblock with federal regulators last month.
While announcing better than expected quarterly financial performance Wednesday, which shipped shares up nearly 5 percent in morning trading, Hunt Valley based broadcasters said it is in discussions with Chicago-based Tribune on the next step in Sinclair’s proposed acquisition of rival TV station owners.
“With regard to the acquisition of Tribune Media Company, we work with them to analyze processes for the legislative process that are in the best interest of our company, employees and shareholders,” said Chris Ripley, President and CEO of Sinclair, in a statement.
Sinclair had said it was “shocked” last month after Ajit Pai, chairman of the Federal Communications Commission, unexpectedly raised concern about the al and sent it to a review by an administrative judge, a move that could delay the agreement at a minimum and earlier has meant the end of such mergers.
During a morning conference call with analysts, Ripley said the company would not offer an update of the proposed Tribune acquisition, but “we expect to do so in the near future.”
He also said that the TV industry is expected to be a major recipient of this year’s half-time election, as he said is “Expected by Many to Expend the Most Expenses in American history. “
Ripley’s comments came as Sinclair reported financial results for the second quarter ending 30 June. Sinclair reported earnings of $ 28 million or 27 cents per share, compared with earnings of $ 44.6 million, or 43 cents per share, in the second quarter of last year. The last quarter includes USD 39 million in fees related to financing commitments for the Tribune acquisition.
Revenue increased almost 12 percent to $ 730.1 million, compared to $ 652.2 million for the second quarter of a year ago.
Profit exceeded Wall Street analysts expectations of 2 cents per share, while revenues also beat analysts estimates of $ 715.5 million.
At noon, the shares in Sinclair were up 4.4% to $ 27.15.
“The second quarter results were well ahead of guidance in all important financial metrics, and we expect the second half to continue to be robust”, partly due to strong spending on political advertising, Ripley said.
Political revenues in the second quarter amounted to $ 28 million, comparing oaths with $ 5 million a year ago in an optional year.
Sinclair’s proposal to buy Tribune had been on its way to close shortly after July 12, although it took longer than expected during a pro-business FCC, one that had loosened what some broadcasters regard as obsolete TV ownership rules.
Opponents for months had demanded a halt to a merger that would cement Sinclair’s seat as the nation’s largest transmitter and give it an even bigger platform to be able to conservative views.
Pai, a representative of President Donald J. Trump, who has been considered friendly to Sinclair and such a merger, raised “serious concerns” last month as to whether the deal would serve the public interest.
Sinclair’s acquisition of Tribune, originally announced in May 2017, would provide Sinclair control of 233 television stations, including 42 Tribune-owned stations and a presence in such top markets as New York and Chicago. According to this proposal, Sinclair stations would reach 72 percent of US television households. (Tribune Media was previously part of Tribune Co., which once owned The Baltimore Sun and other newspapers, but threw them off in 2014.)
In order to stay under the national television ownership captain, Sinclair suggested that 23 stations, including 14 owned by Tribune and nine own.
While Sinclair executives would not comment on Tribune-related issues during Wednesday’s talks with analysts, Ripley answered questions about how uncertainty could affect the company’s appetite for acquisition, especially when Disney appears to sell off regional sports networks as part of its $ 71 billion for to buy most of the 21st Century Fox entertainment assets.
“Our appeal to make further acquisitions has not changed due to the current status of Tribune transaction,” said Ripley. “We will seek a scale within the shipping industry.”
Ripley called some of the regional sports cable networks “interesting” and “good fit with the broadcast footprint and business. [But] it must be for the right value and right deal.”
Asked about the possibilities for mergers and acquisitions of the Tribune Agreement falls through, Ripley says that the regulatory environment is still “very beneficial”, especially with the so-called “UHF discount on-site, enabling stations to broadcast on the higher frequency air waves to count only half of the audience towards a national cap.