Sinclair, Tribune merger afoot?

Potential mega mergers could be on the horizon – and Sinclair-Tribune may be first

The worst-case scenario many in the TV industry fearing could come true.

Several reports surfaced this week if the FCC relaxes – or eliminates the TV ownership rules, Hunt Valley Md.-based Sinclair Broadcasting could merge with Chicago-based Tribune Media.

Talks are preliminary, according to sources. Neither company had comment.

If it happens – and it’s a big if – Sinclair would finally get to crack the five largest markets where Tribune owns stations, including WGN-TV, CLTV, and WGN-AM in Chicago. It would also end local ownership of the trio, which dates back to 1924 for WGN Radio and 1948 for WGN-TV.

If WGN Radio is acquired by Sinclair, it could be shopped to potential buyers. However, Sinclair does own a few radio stations, notably in Seattle where it acquired KOMO-AM with ABC affiliate KOMO-TV from former owner Fisher Communications.

Since Republican Donald Trump was elected into the White House, there has been speculation the FCC – now chaired by Ajit Pai, would deregulate media ownership rules even further than they are now. So far, Pai has received positive reviews from television industry insiders as opposed to his predecessor, former chairman Tom Wheeler.

Sinclair owns several downstate TV stations, including ABC affiliates WICS in Springfield, WICD in Champaign, and WHOI in Peoria, a former ABC affiliate now running programming from digital subchannel Comet, which Sinclair owns. Tribune’s largest station is WPIX in New York City while ABC affiliate WJLA in Washington D.C. is Sinclair’s largest. Tribune meanwhile, owns one other station in Illinois, ABC affiliate WQAD-TV in Moline.

Among larger markets in the Midwest, Sinclair owns a station in Minneapolis (WUCW), Tribune has a Indianapolis duopoly (WTTV/WXIN), and both companies owns stations in St. Louis and Milwaukee.

The deal could also have ramifications for the syndication business. Both companies are frequent buyers of such fare.

Currently, Tribune has stations covering 44 percent of the country, while Sinclair stands at 39 percent. The cap is currently at 39 percent, set by the FCC and Congress. Tribune’s figure comes as its cap is grandfathered in due to the elimination of the UHF discount, which covers for half the coverage (in the analog days.) With Republican control back at the White House and FCC, media companies figure now is the time to make some moves.

This comes as station groups are trying to increase their economies of scale as they are finding it tougher to compete with Silicon Valley’s big five: Facebook, Google (with YouTube), Netflix, Hulu, and Amazon, drawing younger and more affluent viewers away from linear television. In addition to the older-skew the medium is facing, advertising money is slowing with an increasing dependency on political dollars.

Also not helping is the merger of several blue-chip advertisers, notably Kraft and Heinz – reducing the pool of potential clients.

This past week, Tribune announced revenue in the 4th Quarter (October to December 2016) for its TV division grew 13 percent from 2015. Tribune CEO Peter Ligouri announced recently he was retiring; still no word yet on who his replacement might be. Tribune recently sold its real estate holdings, and non-core assets (digital properties such as gracenote and the Tribune Tower.)

Sinclair has been known in circles for a conservative lean in newscasts and most stations air one-minute commentaries from conservative commentator Mark Hyman. If this merger comes to pass, it would be interesting how this would play out in a deep-blue TV market like Chicago, where WGN-TV’s newscasts are immensely popular.

WGN announced another news expansion this week by adding a 6 p.m. newscast, bringing its news output to 70.5 hours per week – the most of any station in Chicago.