Sinclair eyes takeover bid of Scripps

Sinclair Broadcast Group, one of the largest owners of local television stations in the country, is looking to purchase one of its smaller competitors.

As of Monday, Sinclair has “built a roughly 8% stake in E.W. Scripps and is vying to acquire the local TV broadcaster,” Lauren Thomas and Joe Flint of The Wall Street Journal report. The two sides have held “constructive talks” regarding a potential takeover bid, and it is believed Sinclair’s increasing stake in the company is designed to ramp up pressure to close a deal.

Scripps owns over 60 local TV stations in 40 markets, while Sinclair owns 178 across 80 markets. Any deal would face serious regulatory hurdles, at least on paper. The acquisition would require the FCC change its rules regarding whether one company can own TV stations that reach more than 39% of American households. This year, FCC Chairman Brendan Carr has publicly mulled loosening those restrictions, creating a potential pathway for acquisitions such as this.

In August, Nexstar announced a $6.2 billion acquisition of Tegna. That transaction faces similar regulatory challenges.

A Sinclair-Scripps deal would have wide-ranging impacts for certain live sports rights. Scripps, with its Ion broadcast network, has curated a sizeable portfolio of sports content, including weekly WNBA doubleheaders and NWSL matches. Its affiliates are also the primary local rights holders for four NHL teams: the Las Vegas Golden Knights, Florida Panthers, Tampa Bay Lightning, and Utah Mammoth.

Sinclair has a much smaller sports portfolio after relinquishing its cohort of regional sports networks (now the FanDuel Sports Networks) during a Chapter 11 bankruptcy proceeding that concluded January of this year. However, Sinclair still fully owns Tennis Channel and also has a 50% stake in the Chicago-area Marquee Sports Network. Earlier this year, it was reported that Tennis Channel had received multiple purchase offers which valued the network at over $1 billion, but the offers were rejected by Sinclair.

Per The Wall Street Journal, Scripps’ sports rights are driving some of the perceived value in this deal. For Sinclair, the acquisition would get itself back in the game after losing the vast majority of its sports holdings earlier this year.

In a statement released by Scripps on Monday, the company says its board, “will continue to evaluate any transactions and other alternatives that would enhance the value of the company and would be in the best interest of all company shareholders.”