A sign posted outside the Sinclair Broadcast Group headquarters in Cockeysville, Maryland, USA.
Andrew Haller Bloomberg | Getty Images
sinclair Shares of fellow broadcast station owners revealed E.W. Scripps The move was announced Monday as the two companies move towards a merger.
Sinclair owns an approximately 8% stake in Scripps and recently began a strategic review of its business that could lead to a partnership, according to filings. Meanwhile, Scripps is struggling in a highly competitive industry and is one of the smallest companies in its industry.
Sinclair said in its filing that it has been in “constructive” discussions regarding the transaction and believes it could close within nine to 12 months if an agreement is reached.
Sinclair said in the filing that if the merger were to go through, it would generate synergies of $300 million based on the transaction multiple.
Scripps stock rose more than 40% on Monday, while Sinclair stock rose 7%.
Sinclair, which acquired the stock for about $15.6 million, declined to comment beyond Monday’s SEC filing.
Scripps said in a statement Monday that its board “will take all appropriate steps to protect the company and its shareholders from the opportunistic actions of Sinclair and others.”
“Scripps’ board of directors and management are committed to increasing value for all shareholders through the continued execution of our strategic plan,” the company said in a statement. “The board and management team are united in doing only what is in the best interest of all of the company’s shareholders, employees, and its many communities and audiences across the country.”
The statement added that the board continues to evaluate “all transactions and other alternatives that would enhance the value of the company and are in the best interests of all shareholders.”
Broadcast television group owners have struggled in recent years, along with other media companies, due to the shift from traditional pay-TV bundles to streaming. Most of these stations make most of their revenue from so-called retransmission fees, which traditional TV distribution companies pay per subscriber.
Station owners like Mr. Sinclair were eager to consolidate amid the Trump administration’s push for deregulation.
In August, nextstar media groupthe largest owner of these stations, has agreed to the acquisition. Tegna 3.54 billion dollars.
Meanwhile, Sinclair is also considering spinoffs or divestitures of its venture units, including its pay-TV network Tennis Channel and its marketing technology business Compulse, which was recently rebranded as Digital Remedy.
Sinclair and its advisers held discussions with potential merger partners earlier this year, CNBC previously reported.
