Sports, Not Politics, May Be Driving Fox's Latest Sinclair Station Bid

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Rupert and Lachlan Murdoch

Fox has 28 local channels already and rights to NFL games and other sporting events that it could better monetize with more stations.

21st Century Fox could agree as early as this week to purchase up to 10 local TV stations from Sinclair, a deal that hints at the direction Rupert Murdoch and sons Lachlan and James intend to take their conglomerate after most of it is sold to Disney.

For Sinclair, a sale could be a necessity if it intends to obtain regulatory approval for its $3.9 billion acquisition of Tribune Media, which will make the merged company the largest owner-operator of local TV stations, with more than 200 of them. In some markets, the merged company would have more than one "full-power" station, so it's looking to offload those to Fox in order to placate the FCC.

While some see conservatism as an underlying reason for the transaction — Sinclair management and Rupert Murdoch are like-minded on many political issues — those familiar with Fox's motivation say it's more about sports, primarily the NFL. 

Fox has 28 local channels already and rights to NFL games and other sporting events that it could better monetize with more stations, especially in markets such as Seattle and Denver, where the NFC's Seahawks and AFC's Broncos, respectively, make football practically must-see television.

In the Disney transaction, Fox is keeping its broadcast network, and a closer association with Sinclair and its giant footprint of roughly 72 percent of U.S. households after its merger with Tribune could help Fox hang on to important affiliates.

"While we had expected Fox to potentially pick up stations in Seattle (an NFC market) and some of the larger divestiture markets, we believe a potential acquisition of 10 stations is above expectations and think this could help spur the renewal of the Sinclair/Tribune Fox affiliations, a positive for Sinclair," RBC Capital Markets analyst Steven Cahall wrote in a research note.

Fox and Sinclair declined to comment on the negotiations; those familiar with them say a deal is close but that the final sale may include fewer than 10 stations.

And while sports is center stage for Fox, politics is at least a factor, given the Murdochs' belief that there will be a lot of political ads bought and sold in local markets during the contentious President Trump era.

Some observers say that "New Fox" (the company that will be left after Disney buys most of Fox's cable channels, movie studio and overseas satellite TV assets) is tipping its hand, and that more local channels are desired. Local television might be a better business than pay TV and movies in a digital era dominated by Facebook, Google, Amazon and Netflix, goes the thinking.

New Fox's other assets after the Disney deal closes include the Fox News Channel and Fox Business Network, along with Fox Broadcasting and the 28 — so far — local stations.

If a Fox-Sinclair deal is struck, it likely will be contingent on Sinclair's ability to close its acquisition of Tribune, which is not a slam-dunk due to political opposition.

Progressive activists complain, for example, that Sinclair slants its news coverage and that its editorials nearly always lean right, and they therefore object to it growing larger through acquisitions.

There's speculation, in fact, that Sinclair's ultimate goal is to launch a competitor to Fox News, though management has said it has little interest in doing so.

Even competitors on the political right have objected to the Sinclair-Tribune hookup. Newsmax, a magazine that launched its TV channel four years ago, said, "A free and diverse press ... will be crippled by this proposed merger."

Georg Szalai contributed to this report.

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