Sinclair Eyes M&A Market With Interest

Let’s make a deal.

OK, Sinclair Broadcast Group boss David Smith didn’t exactly say that during the company’s second-quarter earnings conference call Wednesday morning. But what he did say is that the station group is watching M&A activity with interest.

“We’ve noticed a number of groups out there for sale,” said Smith, Sinclair president-CEO, in response to a question from analyst Aaron Watts of Deutsche Banc. “If we look at those businesses and they fit our profile and are accretive … we’ll take a look at them.”

Watts had noted that there are more groups on the sales block now than there have been in several years. They include Nexstar, McGraw Hill, Young and Freedom.

Sinclair ranks 9^th among the biggest station groups with roughly 20% coverage of U.S. television households.

Smith and David Amy, Sinclair EVP-CFO, both noted that many private equity players are seeking to cash out their broadcast holdings — a factor that works to the advantage of potential strategic buyers such as Sinclair.

“There has to be 50 private equity companies that own 50-100 TV stations and they don’t know what to do with them,” Smith said. “I don’t see interest from the private equity side — they’re all trying to bail.”

Barry Lucas, Gabelli & Co. analyst, noted that if private equity players are indeed on the sidelines, that gives an advantage to the few strategic buyers that have the appetite and financial capacity to increase their portfolios.

Smith and Amy agreed. “When you look at Sinclair, I think we’re advantaged,” Amy said. “There’s nothing we have to go out and purchase.… We can be very selective. If the price make sense for us, we can deal.”