Sinclair's Ripley: Fewer Local TV News Teams Would Strengthen Output

If Sinclair Broadcast Group has its way, the local broadcast industry would boil down to two, maybe three, station groups, with one or two of them churning out local content in each market.

“Right now there are three to five local players, and to us that doesn’t make sense,” CEO Chris Ripley said Wednesday during the group’s Q2 2017 earnings call.

Consolidating news operations would lead to “significant savings.” In addition, “after that you have stronger local content producers which will be able to spread their content and resources across multiple platforms.

Related: Sinclair Politicking Blasted Again on National TV

“The strategic output would also be great for the industry,” he said. Although such consolidation is dependent on the FCC relaxing regulations, Ripley said he, and his fellow Sinclair execs, believe that is where the industry is heading.

Ripley's comments come as Sinclair’s acquisition of Tribune Media—which would create a station group of unprecedented size—moves through the regulatory approval process. 

Its approval would push Sinclair's vision of the broadcast industry closer to reality. The $3.9 billion deal would give Sinclair nearly 80% national reach. The move has sparked opposition from a breadth of individuals and groups including free speech advocates and opponents to Sinclair’s conservative political agenda.

Related: Local Broadcasting M&A Deals Hit $4.5B in Q2 2017

Ripley, however, said he is positive about the outcome. “We have no reason to believe (the deal) won’t close around the year’s end,” he said. “The FCC has been very constructive in terms of its review.”

Ripley’s comments came on the heels of Sinclair releasing its earnings for the second quarter 2017—during which media revenue hit $631.8 million.

The figure represents a 4.2% increase over Q2 2016, Sinclair said.

The increase was fueled by a 30% rise in digital revenue excluding money from new digital investments, according to Sinclair. Among the biggest swings was political revenue, which hit $16.7 million during election-year Q2 2016, dropping to $5.4 million during the three months ending June 30.

Among Q2 2017 financial highlights were:

  • Total revenues increased 1.9% to $679.3 million, versus $666.5 million in the prior year period.
  • Operating income was $118.8 million versus operating income of $129.1 million in the prior year period, reflecting $6 million of expenses related to the Tribune and Bonten Media Group acquisitions.
  • Net income attributable to the company was $44.6 million versus net income of $49.4 million in the prior year period.
  • Diluted earnings per common share were $0.43 as compared to $0.52 in the prior year period.

Also during the last quarter, Sinclair has been a leader in prepping the industry for the rollout of ATSC 3.0, the next-gen broadcast standard. Sinclair and Nexstar Media created a spectrum consortium to maximize opportunities related to the new standard, which Univision and Northwest Broadcasting have since joined.

In July, Sinclair and Nexstar reached a tentative agreement on coordinating the transition to ATSC 3.0 in 97 markets, including 43 where both groups have stations.