Sinclair Announces Proposed Restructuring of Allbritton Deal In Order to Meet Objections of FTC
Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) announced today that it has submitted the attached letter to the Federal Communications Commission in order to meet certain objections the FCC has to shared services agreements in particular and to shared agreements generally which are coupled with a contingent financial interest, such as a guarantee or an option.
If the proposed restructuring is approved, Sinclair will sell certain stations it currently owns to parties other than the parties who were originally contemplated to buy these stations, and following the sale will not provide any services to such stations. The stations to be sold are WHP, the CBS affiliate in Harrisburg, Pennsylvania, WMMP, the MyNetwork affiliate in Charleston, South Carolina and WABM, the MyNetwork affiliate in Birmingham, Alabama; Sinclair would also discontinue providing services to WTAT, the FOX affiliate in Charleston and would transfer to the buyer of WHP, the rights under an existing LMA to provide services to WLYH, the CW affiliate in Harrisburg. In each of these three markets, Sinclair is buying the ABC affiliate from Allbritton. Sinclair would retain ownership of WTTO, the CW affiliate in Birmingham.
"The proposed changes to the transaction will have an immaterial impact on Sinclair as a whole and on the Allbritton transaction in particular," commented David Smith, Sinclair's President and Chief Executive Officer. "Although we believe the shared services arrangements that were contemplated would have provided significant public interest benefits, including promoting minority ownership of broadcast stations," Mr. Smith continued, "even without such arrangements the Allbritton transaction will result in significant upgrades for Sinclair in each of these three overlap markets. Moreover, these markets were always a very small part of the Allbritton acquisition, which was driven to a much larger extent by their ABC affiliated station and 24-hour cable news channel in Washington, D.C. The stations to be sold were expected to contribute only approximately $21 million of pro forma EBITDA in 2014, and we expect to realize full value for the stations in a sale. In addition, the sale of these stations will only reduce the previously announced $21.5 million of operating synergies created in the Allbritton transaction by $2 million."
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