Sinclair takes 8.2% stake in Scripps amid takeover push
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The Sinclair Broadcast Group headquarters. Photo by Kevin Dietsch/Getty Images
Sinclair, the third-largest local broadcast company in the country, has taken an 8.2% stake in E.W. Scripps' Class A shares as it pushes to combine with the smaller broadcaster, according to a new regulatory filing.
Why it matters: The Trump-era Federal Communications Commission has signaled a willingness to roll back decades-old ownership cap rules that prevent large broadcasters from merging.
- Those efforts are expected to usher in a new wave of consolidation among local broadcasters, which have for years argued that regulation makes it difficult to compete with Big Tech.
Zoom in: In the new filing, Sinclair said it has engaged in "constructive discussions" with Scripps "for several months regarding a potential combination of the two companies."
- It argues "recent industry consolidation and intensifying competition" reinforce its view that "further scale in the broadcast television industry is essential to address secular headwinds and compete effectively with larger-scale big-tech and big-media players, as well as major broadcast groups."
- "Greater scale will also strengthen broadcasters' ability to sustain their vital public service role in producing local news," it argues.
The other side: In a statement, Scripps said its board and management are "focused on driving value for all of the company's shareholders through the continued execution of its strategic plan," which involves growing its national sports and connected TV businesses.
Context: Scripps is a much smaller broadcaster than Sinclair. Earlier this year, its CEO Adam Symson told Axios that it isn't in a position to do a large-scale acquisition itself.
The big picture: Bigger local broadcast companies are trying to scoop up smaller rivals while the regulatory environment seems more favorable for big deals.
- Nexstar, the largest local broadcast group in America, has agreed to acquire Tegna, the fourth-largest local broadcaster, in an all-cash deal valued at $6.2 billion.
- Apollo Global Management, which is looking to sell its majority stake in Cox Media Group, has eyed bids from multiple suitors, Axios has reported.
What to watch: The fate of many of these deals rests on whether the FCC can lift the current limit on television station ownership.
- Currently, no single broadcaster can own stations that would collectively reach more than 39% of U.S. households.
- FCC chair Brendan Carr has long advocated for repealing decades-old consolidation rules and removing the cap, arguing the FCC doesn't need Congress' approval to do so.
- The National Association of Broadcasters, the primary trade group for the industry, strongly supports Carr's position. Some smaller media companies argue Congress removed the FCC's authority to adjust the ownership cap after approving the current limit in 2004.
