Sinclair Proposes Restructuring of Allbritton Buy

Sinclair Broadcast Group of Hunt Valley, Md., is proposing changes to its proposed $985 million aquisition of ABC affiliate stations owned by Allbritton Communications of Arlington, Va.

The move comes after the Federal Communications Commission voiced objections to parts of the deal in December.

The purchase, which would include KATV-TV, Channel 7, of Little Rock, was originally scheduled to close in the fourth quarter of 2013. But the FCC said the deal's "sidecar transactions" in three markets — Charleston, S.C., Birmingham, Ala., and Harrisburg, Pa. — would violate agency rules against owning too many TV stations in certain markets.

In a letter to the FCC (PDF), Sinclair said it would sell stations in those markets to avoid the sidecar deals.

Those stations include a CBS and two MyNetworkTV affiliates in Pennsylvania, South Carolina and Alabama. Sinclair would also transfer ownership of its Fox affiliate in Charleston, S.C., to the buyer of its CBS affiliate in Harrisburg, Penn.

Sinclair said the stations contribute about $21 million in revenue to the company, which is the nation's largest television station owner. Sinclair CEO David Smith indicated that the loss of these stations wouldn't negatively affect the company's overall revenue.

"The proposed changes to the transaction will have an immaterial impact on Sinclair as a whole and the Allbritton transaction in particular," he said in the release.

Sidecar deals allow a company to control more than one station in a market through "shared services" or joint sales agreements. 

An example of such deals is at work in Little Rock, where Nexstar Broadcasting Group owns NBC affiliate KARK-TV, Channel 4, but also manages Mission Broadcasting's Fox affiliate, KLRT-TV, Channel 16.

In fact, Nexstar "manages" KLRT out of the same TV studios and offices as it "owns" KARK, and does so with many of the same personnel and overlapping newsgathering resources. Nexstar and Mission have similar arrangements in other markets.