Sinclair Reveals Merger Talks With E.W. Scripps In Latest Shakeup Of Local TV Sector

Major local TV station owner Sinclair Inc. has revealed it has been conducting merger talks with rival E.W. Scripps.

In an SEC filing, the company said it had acquired 8% of Scripps Class A shares in the open market for $15.6 million.

Sinclair says a deal could be completed in nine to 12 months.

Like another proposed transaction in the local TV sector, Nexstar’s pending bid to acquire Tegna, the deal would require a change to federal rules limiting station ownership. The FCC currently will not allow ownership of stations reaching 39% of U.S. households, but Donald Trump’s appointed chair of the regulatory agency has voiced strong support for lifting the cap.

Stations say they are unfairly restrained at a time when tech giants face no similar limits to their reach in media. Critics of the consolidation say it will reduce the amount of local TV news, following the path of the newspaper and radio industries before it.

Even if the FCC moves to lift the cap, there is debate about whether Congress would need to get involved. Anna Gomez, the lone Democrat on the regulatory body, has said the FCC does not have the power to unilaterally change ownership rules.

Sinclair’s filing said the merger “would be structured to require no external financing as the combined company would maintain each company’s respective debt and preferred capital structures. As a result, the transaction would avoid significant refinancing costs while meaningfully reducing the Issuer’s leverage through the realization of synergies and lowering future refinancing risk.”

It pegged the annual synergies at $300 million.

Sinclair, like Nexstar, is championing the consolidation move as a way of preserving its “vital public service role in producing local news.”

“Recent industry consolidation and intensifying competition,” the company said, proves 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.”