Key Points
- Sinclair CEO Chris Ripley says the regulatory environment favors mass-media consolidation.
- The company is considering more acquisition targets amid a likely loosening of broadcast TV ownership rules.
- Critics worry consolidation could lead to higher cable TV fees and lower investments in local news.
At a time when the broadcast television industry is facing tougher competition from streaming competitors, the biggest companies involved in traditional TV are pushing for regulatory changes that will allow them to scale up their operations — and Sinclair is ready to take its shot.
During a conference call with investors on Wednesday, Sinclair CEO Chris Ripley said the regulatory environment was favorable to mass-media consolidation in the broadcast sector, where before it was hamstrung by onerous regulations that appear to be on their way out.
Currently, the Federal Communications Commission (FCC) says a single broadcaster cannot hold direct ownership of TV stations that reach more than 39 percent of the American viewing audience. Until recently, the FCC also prohibited stations from owning two of the top-four TV stations in a given city — a rule that was invalidated through a legal challenge.
FCC Chairman Brendan Carr, who was hand-picked by President Donald Trump to lead the agency in January, has indicated a willingness to “delete” the rules that broadcasters consider to be too onerous, persuaded by executives who say the limitations are unfair in an era where streaming competitors are chipping away at their dominance.
“The broadcast sector is facing secular challenges within linear TV while having a unique opportunity for significant consolidation,” Ripley said during the call on Wednesday. “We are at an inflection point where scale and operational efficiency will increasingly separate high-performing companies from the rest.”
Sinclair is already one of the largest operators of independently-owned TV stations in the country, with a portfolio of nearly 300 full-power and low-power licensed TV stations from California to Maryland. Like other broadcasters, Sinclair circumvents the ownership restriction through a novel strategy of forging deals with companies like Deerfield Media and Cunningham Broadcasting, which directly own the local stations and are named as the licensees of record, but whom allow Sinclair to have direct operational control of nearly all their outlets.
Those partnerships are known as shared-services agreements (SSAs) or local marketing agreements (LMAs). The loophole is more complicated than it comes across, with a lot of paperwork and extra manpower needed to make sure they are legally sound.
That expense in effort and money is better served somewhere else, executives at Sinclair and other broadcasters contend. The rapid scale of services backed by Apple, Amazon and Google also lend credence to the idea that broadcasters should be allowed to compete through consolidation, they assert.
“Sinclair is well-positioned in this environment, and we’re actively evaluating how best to participate to maximize value for our stakeholders,” Ripley said.
Prior to last year’s election, broadcast executives were candid in industry forums that a win by -hen-former President Trump would give them a greater ability to undue burdensome rules and regulations that prevented the kind of consolidation Ripley and others now crave. They viewed former President Biden as the less-attractive option, given how the FCC under the Biden administration operated. (Not well, by most standards of governance.)
While the Biden administration signaled a pro-consumer approach to regulation, the FCC under former Chairwoman Jessica Rosenworcel offered the impression of a slow and, at times, inept agency that simply stonewalled on important issues rather than delivering unfavorable outcomes. In some respects, the agency was heavy-handed, fining broadcasters for unscrupulous practices in their cable TV dealings while dismissing attempts to create a level playing field for the traditional TV industry.
Under Carr, the FCC has swung hard in the other direction, invalidating rules that he considers to be outdated and opening the door for mass consolidation with little apparent regard to the long-term consequences. Critics are concerned that eliminating, rather than lifting, broadcast ownership caps will lead to a situation where companies like Sinclair have too much concentration of power, and are able to exert higher fees from cable and satellite platforms — and, in turn, their subscribers — more rapidly than they are already doing so.
Ripley says that is likely to come anyway: He predicts that the ownership cap will be eliminated by the first half of 2026, which will kick open the door for mass consolidation in the sector. He estimates Sinclair will save $600 million to $900 million in “annual synergies” through mergers and “subsequent portfolio optimizations” — a fancy way of saying Sinclair may restructure core parts of its business, something that typically leads to layoffs.
“This level of consolidation would strengthen the industry’s financial footing and position broadcasters as more capable competitors to big media and big tech,” Ripley said. “Equally important, it would help safeguard local independent and diverse news coverage that communities across the country rely on.”
Ripley didn’t offer further comments on how mass media consolidation will lead to better local news for viewers or the communities where they live. Historically, in the broadcast TV industry and businesses with editorial operations, mergers and acquisition have had the opposite effect — fewer journalists are employed to produce less news, not more.
Such was the case in El Paso, when Sinclair acquired KFOX-TV (Channel 14, CBS) from Cox Media group in 2012. The following year, Sinclair partner Cunningham Broadcasting announced it was buying cross-town rival KDBC (Channel 4, CBS) from Titan Broadcasting. Sinclair financed the sale and, one week later, the company exercised its option to buy KDBC outright.
At the time, the two-station rule applied: Sinclair couldn’t own KDBC and KFOX in a local TV market with a limited amount of news-producing stations. Complicating the matter was that KDBC and KFOX were major network affiliates, which typically rank higher than independent and Spanish-language broadcasters. In El Paso, the landcape is different: Some Spanish stations, including outlets across the border, had stronger viewership than KDBC, and neither station had more viewers than ABC affiliate KVIA (Channel 7).
Sinclair requested, and received, a waiver from the FCC to acquire KDBC based on its ratings. At the time, KDBC’s news broadcasts were produced by another station through an unusual arrangement, but it had two full-time journalists dedicated only to its outlet. Once the merger with KFOX was completed, KDBC didn’t launch its own news operation — it shared resources with KFOX. Today, both stations use a single newsroom, with a shared news team, producing news packages that run on both channels.
That does not mean Sinclair didn’t invest more in local news: It used the assumed cost synergies to buy and renovate a new studio, with top-of-the-line technology. But it didn’t hire more journalists to produce more news — it went in the other direction.
In the past two years, Sinclair has explored similar cost savings in other markets where it operates, consolidating newsrooms into regional content hubs that serve several small communities where it broadcasts. In 2023, Sinclair laid off its entire news operation at Medford-based CBS affiliate KTVL (Channel 10), which covered a wide region across the Oregon-California border. News is now produced by KMTR (Channel 16), the NBC affiliate in nearby Eugene. That same year, Sinclair eliminated its local news departments at other stations in Nebraska, Iowa, Ohio and Florida, consolidating some newsrooms while opting to carry national news programming on other stations.
That trend could accelerate if Sinclair acquires more stations — and it is already moving in that direction. Around a dozen transactions are awaiting approval from the FCC, and Sinclair intends to announce a few other acquisitions by the end of the year.
