Sinclair says it will restructure its Allbritton deal to make it more palatable to the FCC, which is looking closely at sharing agreements coupled with financial arrangements such as purchase options.
The FCC, under new chairman Tom Wheeler, has signaled tied arrangements such as those in the Sinclair/Allbritton deal would have a high hurdle and now Sinclair is offering to remove those hurdles in the interests of getting a deal done.
Sinclair said it was concerned about meeting the one-year July 27 date for closing the merger, after which it can be terminated from either side. "Sinclair is concerned that the process for review of applications which propose combinations of sharing arrangements and contingent financial interests...would result in undue further delays to processing of the applications and may result in the parties being unable to consummate the proposed transactions by the outside date," the company told the commission.
Sinclair proposed Thursday to sell WHP Harrisburg, Pa.; WMMP Charleston, S.C.; and WABM Birmingham, Ala., to new third parties and said it will not provide any services to those stations. It had planned to spin them off to a Deerfield party or Howard Stirk Holdings, and provide services to them through sharing arrangements.
Sinclair said it would also discontinue its shared services agreement with WTAT Charleston and transfer the rights to provide services to WLYH Harrisburg under an existing LMA to the new owner of WHP.
Those three markets are where Sinclair is buying Allbritton ABC affiliates.
"The proposed changes to the transaction will have an immaterial impact on Sinclair as a whole and on the Allbritton transaction in particular,” said Sinclair president and CEO David Smith in announcing the proposal, which Sincliar has submitted to the FCC. “Although we believe the shared services arrangements that were contemplated would have provided significant public interest benefits, including promoting minority ownership of broadcast stations, even without such arrangements the Allbritton transaction will result in significant upgrades for Sinclair in each of these three overlap markets. Moreover, these markets were always a very small part of the Allbritton acquisition, which was driven to a much larger extent by their ABC affiliated station and 24-hour cable news channel in Washington, D.C."
