Sinclair + Tribune = Transformative Force

I like the New York Times and the Washington Post. They are great newspapers that look like they just might survive the meteor strike of the internet, adapt and thrive.

But they blew their coverage of Sinclair’s acquisition of Tribune Media this week, spinning it mostly as the genesis for a conservative news network that would challenge the Fox News Channel.

It may be that, but it is so much more. I liked the word Sinclair CEO Chris Ripley used to describe the $6.6 billion deal — “transformative.”

The deal certainly transforms Sinclair and it may transform the entire broadcasting business.

With Tribune, Sinclair goes from a large collection of TV stations to a national broadcasting platform with ambitions that go far beyond those of the Big Four networks. The new Sinclair will have 233 stations in 108 markets including 39 of the top 50. It will reach 72% of U.S. TV homes. (These numbers are all a little squishy right now. The actual numbers will depend on how strictly the FCC enforces its national and local ownership limits when it reviews the deal.)

Most important, Sinclair gets outlets in New York, Los Angeles and Chicago, which has always been the sine qua non of big-time broadcasting.

“We will be the biggest station group by a country mile,” said Ripley on the analysts call after the deal’s announcement on Monday. No doubt about that.

When I think of Sinclair, I think of ATSC 3.0, the new broadcast standard that it helped develop and that is now awaiting FCC approval, and to a large extent the standard is what this deal is about.

Sinclair’s national platform will allow it to take full advantage of 3.0. Just how it will do that is not clear because 3.0 is not one thing, but a menu of new services and enhancements.

Sinclair currently seems intent on mobile datacasting, providing other companies a low-cost means of sending large amounts of data to widely dispersed receivers. Sinclair thinks broadcasting’s one-to-many architecture is ideal for this and talks about delivering data to connected and autonomous cars.

Another option is to use the expanded through-put of 3.0 to offer more channels of programming, perhaps free or perhaps in “skinny bundles” of broadcast and cable channels for a monthly fee. Sinclair has also talked about taking on SiriusXM with scores of audio channels, another pay service.

Because 3.0 integrates broadcasting with the internet, Sinclair will also be able to offer on-demand programming and targeted and interactive advertising and keep pace with cable and OTT in offering such services.

The key is mobile. The new standard will liberate broadcasting from the living room and put it in cars and smartphones — or so Sinclair and its other proponents say. (I’m still skeptical about 3.0 finding its way into the phones.)

It’s going to take awhile to roll out 3.0. Sinclair will have to upgrade the RF plants at all of its stations and that is now entangled with the post-incentive auction repack of the TV band. So, it will likely take three years for full deployment. (The good news is that the government will subsidize a big part of the project. The many Sinclair stations that have to move to new channels in the repack are entitled to government reimbursements for RF upgrades.)

But there are immediate transformative benefits from the Tribune deal, too.

The scale gives Sinclair more muscle in negotiating for retrans fees from the cable and satellite, for resisting demands for reverse comp from the broadcast networks, for buying technology and for licensing programming from Hollywood and sports rights holders.

Fox was so freaked out by the idea of Sinclair acquiring Tribune’s 14 Fox affiliates that it tried to put together a last-minute deal to steal the group away from Sinclair. With Tribune’s affils, Sinclair will control nearly 28% of Fox’s coverage, second only to Fox itself with its O&Os. That practically made Sinclair a partner in the network.

With Tribune’s major market stations, Sinclair becomes a true national network, more like a basic cable network than a station group. Media agencies avoid broadcasting because they have to deal with too many stations to make a buy and it becomes too costly. With Sinclair, they can get a big bite of broadcasting by knocking on just one door.

Two years ago, Sinclair formed the Audience Network to aggregate impressions across its stations and sell them nationally. The addition of the Tribune stations will means more impressions at a higher rate, said Ripley. “This is something we are very excited about and we think could have a very large impact on both the top and bottom lines.”

I don’t have a handle on Sinclair’s network programming ambitions, but, whatever they are, they should be a terrific boost for Tribune’s major market stations. Sinclair has four diginets looking for distribution — Comet, Charge!, Stadium and TBD — and it picks up two more with Tribune — Antenna TV and ThisTV. That may be one or two diginets too many, but we’ll see.

And then, of course, there is news.

When Sinclair bought WJLA Washington and its companion regional news channel NewsChannel 8 in 2014, Sinclair’s visionary leader David Smith said he wanted to use them as the foundation for a national cable news service. That would have been difficult because he had no news presence in the major markets. He does now.

Sinclair has options here. It could go ahead with a cable news channel as Smith envisioned. Or, it could launch a news diginet on station subchannels. Or, it could produce a national daily newscast for broadcast. Or, it could do nothing more than it’s doing now, providing a national news overlay for its local newscasts.

I said above that the deal may also transform the broadcasting industry. I believe that because it underscores the need for scale. To grow and prosper in a world of media giants like Comcast, Disney, 21st Century Fox, CBS, Facebook and Netflix, you’d better have some weight of your own to throw around.

I’ve been on the alert for mergers among the mid-size station groups since the end of the incentive auction when the broadcasters could talk freely among themselves again. I’m now on heightened alert.

By the way, for those who want to match Sinclair’s national footprint, there is one last good opportunity: Ion Media, which reaches of 68% of homes. Interested parties should see CEO Brandon Burgess.

I suspect that Sinclair is also going to stir things up by becoming a more formidable competitor in each of its 108 markets. It’s got the resources, news and otherwise, plus it’s got the incentive. If the FCC loosens the local ownership rules next year, it will be able to buy or swap for more and better stations in its markets.

Ripley said that Sinclair now has the No. 1 stations in 26 of the top 75 markets. That should serve notice to those stations in the other 49 top-75 markets where Sinclair is not No. 1 to step up their game.

Finally, the deal tells me that 3.0 is really going to happen. There is nothing holding it back. Sinclair will now be able roll out 3.0 services without having to rely on a lot of other broadcasters to fill coverage gaps. Sinclair’s charging ahead should encourage others to follow.

Yes, “transformative” is my takeaway.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or here. You can read earlier columns here.