The chief executive of one of the largest independent television broadcasters in the country has criticized government regulators for being inconsistent in their application of federal rules with regard to mergers and acquisitions.
In an interview published this week, Sinclair CEO Chris Ripley characterized officials at the Federal Communications Commission (FCC) with “not really following the rules on the books,” making it difficult for broadcasters to execute on certain transactions, including the potential sale of stations.
Earlier this year, financial news outlet CNBC reported Sinclair had hired an investment bank to explore the possible sale of five dozen television stations, or around 30 percent of its current broadcast portfolio. Sinclair owns nearly 185 TV stations across the country, most of which are affiliated with one of the Big Five networks — ABC, CBS, CW Network, Fox and NBC.
Ripley would not confirm the CNBC report, but told the website TV News Check that the current regulatory environment largely prevented broadcasters from transacting.
“In terms of the M&A (mergers and acquisitions) market, more generally, you know, there are stations out there that are for sale,” Ripley said. “The reality is, with this FCC…it’s difficult to see how M&A can really happen at any type of scale. The regulatory uncertainty right now is very high, and I think that’s what’s preventing transactions from moving forward.”
Related: Sinclair explores selling some TV stations
The broadcast industry has faced a number of challenges over the years — from ongoing softness in the core advertising market that accelerated during the coronavirus pandemic, to pressure from pay TV providers over retransmission consent fees that are paid in exchange for carrying local channels and national networks on their platforms.
While the network owners — the Walt Disney Company, Paramount Global, Comcast’s NBC Universal and Fox Corporation — have launched their own direct-to-consumer services to capitalize on the trend of cord-cutting, independent broadcasters have had to rely on local news and sports combined with the unparalleled reach of their free, over-the-air signals to convince advertisers and pay TV companies that their product is still a viable business.
For years, some broadcasters — including Sinclair — scaled up their portfolio of channels, gobbling up stations in smaller markets and merging with other broadcast entities. The strategy involved leveraging its immense scale to extract higher distribution fees from cable and satellite companies, pressure regulators to impose those same carriage conditions on streaming services and win over advertisers and content distributors alike.
That effort has been stymied since the coronavirus pandemic, with federal regulators blocking transactions that they feel make any particular broadcast entity too big. Last year, the FCC successfully prevented Standard General from acquiring TEGNA and its 60-plus local TV stations. The regulator was also blamed for Mission Broadcasting’s purchase of Detroit-area WADL (Channel 38) from moving forward; after a year of scrutinizing the deal, the FCC gave its conditional blessing to the transaction, but the strings attached were too burdensome for Mission, and the company backed out.
Ripley suggested the situation may not be long, and could hinge on the outcome of the 2024 presidential election in November. If former President Donald Trump wins a second non-consecutive term, he would almost certainly install an FCC chairperson that would be more-favorable to an environment of deregulation.
“A Republican-led FCC would be very aggressive on dereg — they understand that the rules we have on the books today are circa 1980, maybe 1990 appropriate,” Ripley said. “So, I’d expect them to act pretty quickly on that.”
All hope is not lost if current Vice President Kamala Harris secures the White House for a second consecutive term under Democratic authority. Ripley thinks current FCC Chairperson Jessica Rosenworcel — who has drawn the ire of broadcasters and other industries regulated by the agency over the past three years — could be on the way out.
“It’s typical that you do one cycle of chairpersonship, and then pass the baton to someone else,” Ripley said. “I think (FCC Commissioner Geoffrey) Starks or (Commissioner Anna) Gomez would be very sensible and reasonable about their approach, but certainly I wouldn’t expect them to be nearly as deregulatory as a Republican.”
