UPDATED 11:59 A.M. ET

Sinclair Buying Tennis Channel For $350M

The purchase price is partially offset by the network's $200 million in net operating losses, which Sinclair will be able to carry forward to its taxes and save it around $65 million. Sinclair has lined up deals with MVPDs to increase the channel’s coverage from 30 million to 50 million homes. The channel’s CEO, Ken Solomon, is staying on.

Plunging deeper into programming, Sinclair Broadcast Group has signed a definitive agreement to buy The Tennis Channel for $350 million, the station group announced Wednesday afternoon.

Sinclair said that it has already signed distribution agreements with MVPDs that will stretch the network’s household reach from 30 million homes to 50 million.

Sinclair said the purchase price is partially offset by the network’s $200 million in net operating losses, which Sinclair will be able to carry forward to reduce its taxes and save it around $65 million.

The deal is subject to regulatory approval and is expected to close by the end of March.

“Tennis Channel is an established property with high-quality content and advertisers, and is vastly under-compensated and under-distributed relative to the value it brings to its viewers. It was the only independently-owned major sports network left, and we knew we could unlock value through a tuck-in acquisition,” said Sinclair CEO David Smith.

“The additional subscriber base, which has already been contracted, equates to the creation of approximately $200 million of incremental value at closing,” Smith added. “Furthermore, we expect this combination to create additional linear and OTT viewership and advertising growth, and we have the added benefit of the continued involvement of Ken Solomon, CEO of Tennis Channel, and a seasoned programming executive.”

BRAND CONNECTIONS

Sinclair EVP Barry Faber added that “nothing is more valuable to video distributors than high-quality, live sports, and we expect the increased carriage of Tennis will be well-received by their subscribers.

“We also expect to leverage our broadcast platform to promote Tennis Channel, which we anticipate will result in increased viewership, further adding to the channel’s value in attracting and retaining subscribers,” Faber added.

Solomon called Sinclair the “perfect” partner. “The larger platform will immediately help develop incremental advertising and sponsorship business and puts us in a great position to enhance our already comprehensive rights portfolio domestically, as well as develop the brand internationally.

“We also intend to utilize Sinclair’s advanced branding capabilities, digital expertise and significant broadcast asset platform to drive increased awareness for both Tennis Channel and our successful subscription-based OTT platform, Tennis Channel Plus.”

Wells Fargo analyst Marci Ryvicker was bullish on the news. “We REALLY like [Sinclair’s] continued investment in content,” she wrote. “We believe the company’s diversification into other types of TV networks via this cable deal, and its previously announced digital networks of American Sports Network and Comet are great strategic moves for continued financial growth.”

Ryvicker added after a Sinclair analysts call on the deal Thursday morning, that “the Tennis Channel works in conjunction with the big sports networks to divvy up rights; it also sub-licenses some of the big matches from ESPN — such as the Australian and US Opens. This is a cost effective way to compete in the space from a rights-fee perspective.

“Incremental benefit should come from a different channel placement — i.e., for some MVPDs, moving the Tennis Channel to digital basic from a sports tier.

There is a lot of opportunity in the over the top (OTT) product TC Plus — Apple TV is a big supporter; and there is a good opportunity to beef up the number of tournaments especially internationally.”

And, Ryvicker’s note concluded: “Carriage is NOT limited to SBGI’s footprint but rather to the MVPD footprint.”


Comments (19)

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Andrea Rader says:

January 27, 2016 at 11:45 pm

Is this Sinclair’s way of increasing distribution of ASN?

Keith ONeal says:

January 28, 2016 at 12:24 am

Tennis Channel? Eeeewwww!

bart meyers says:

January 28, 2016 at 6:59 am

Can Sinclair get the Tennis Channel added to my cable package in time for me to watch this coverage of the Australian Open?

Rey Chavez says:

January 28, 2016 at 8:30 am

The Tennis channel still exists? who knew…… If professional tennis ended today, few in America would notice….

Don Thompson says:

January 28, 2016 at 9:51 am

Retransmission consent leverage, anyone? Please Follow Me On Twitter: @TedatACA

    Darrell Bengson says:

    January 29, 2016 at 2:50 pm

    Bla bla bla anyone?

Angie McClimon says:

January 28, 2016 at 10:32 am

Sinclair is becoming the iHeartMedia of the TV world.

    Wagner Pereira says:

    January 28, 2016 at 12:09 pm

    Quite frankly, I watched Sinclair DC WJLA continual coverage of the Severe Snow Emergency off and on all weekend. They did a great job.

    Wagner Pereira says:

    January 28, 2016 at 12:17 pm

    Well deserved Credit. DirecTV even thought so much of them it put them up on 361-2 fulltime in HD.

    http://tvnewscheck.com/marketshare/2016/01/28/wjla-covers-blizzard-for-56-hours-straight/

    Andrea Rader says:

    January 28, 2016 at 5:23 pm

    They easily outpaced the competition on storm coverage. And they are leaders in technology as well. As for who is becoming the iHeartMedia of the TV world, um, Nexstar anyone?

Andrea Winston says:

January 28, 2016 at 11:38 am

So is this an ACE or Double Fault you decide?

Jeff Douglass says:

January 28, 2016 at 1:51 pm

Does the Tenner Channel provide the cable access point they need to turn NewChannel 8 in DC into a national cable channel?

    Darrell Bengson says:

    January 29, 2016 at 2:53 pm

    They would not need this channel to do that.. It will go nationwide when Sinclair is ready to do so.

Don Richards says:

January 28, 2016 at 2:08 pm

TV101 is right on the money. This isn’t about tennis. It’s a placeholder for a Sinclair Network channel (which could have news, sports…including tennis…as well as entertainment programming).

    Andrea Rader says:

    January 28, 2016 at 5:24 pm

    The Tennis Channel is losing money hand-over-fist and needs to revamp its programming lineup. I’m sure we’ll see a more broad-based offering under Sinclair.


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