Sinclair Makes Unsolicited Bid to Purchase E.W. Scripps
Sinclair made an unsolicited offer to buy all outstanding shares of E.W. Scripps in a deal that it said could proceed under existing broadcast-ownership rules, according to an SEC filing Monday. “We are confident that under existing rules, including the national cap, the transaction can be completed in a timely manner with limited select divestitures,” the company said in the filing. The proposal includes provisions “to reinforce the combined company’s journalistic independence.”
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Sinclair announced last week that it had purchased an 8.2% stake in Scripps in hopes of jump-starting merger discussions (see 2511170056). In a release Monday, Scripps said its shareholders don’t have to take any action at this time, and its board will examine all proposals. The Sinclair filing set a Dec. 5 deadline for a response from Scripps.
Under the proposed acquisition, Sinclair would pay $7 per share to Scripps shareholders -- $2.72 in cash and $4.28 in combined company common stock. Sinclair said the number “represents a 200% premium” on the price of Scripps shares before Sinclair announced its 8.2% stake. The combination would create “$325 million in estimated synergies,” it added.
Scripps owns 60 stations in more than 40 markets, along with networks such as CourtTV, and announced Q3 revenue of $526 million earlier this month. Sinclair has 185 stations and had Q3 revenue of $773 million.
Sinclair’s offer is partly in response to statements that Scripps CFO Jason Combs made at an investment conference last week, a person familiar with the matter told us. Combs talked about the value of scale to broadcasters and said companies need to find synergy opportunities. He also said Scripps’ leadership would “lean in” to the right deal, and they know “that the deregulatory environment may not last forever.” The deal wouldn’t require waivers from the FCC because Sinclair has room under the national cap for most Scripps stations, and the 8th U.S. Circuit Court of Appeals struck down the agency’s top-four prohibition earlier this year (see 2507230063).
The unsolicited offer appears to be intended as an opening position to create shareholder pressure on Scripps leadership to make a deal with Sinclair, a media broker told us. If a final deal were reached between the companies, it likely wouldn’t be similar to Monday’s offer. The two companies are seen as having vastly different management structures and would be an unlikely combination, industry officials told us. The pressure from Sinclair could ultimately lead to Scripps reaching a deal with another company, such as Gray Media, the broker said.
Under the terms of the deal, Sinclair would separate its broadcast business from its other divisions and merge it with Scripps. The company’s board would include representation from both the Scripps family and the Smith family, which owns Sinclair. “Board representation would be proportional to each company's shareholders' ownership in the combined company, ensuring fair and balanced governance,” the SEC filing said. “The management team would be selected by the combined company's Board of Directors and would be built around the best talent, drawing leaders from both organizations.”
The proposal also contained provisions that appear aimed at addressing concerns about how a combination would affect the news reporting by both broadcasters. Sinclair’s stations are widely seen as conservative-leaning, while Scripps has a superior journalistic reputation, an industry official told us. The offer said the new company would “propose adopting jointly developed editorial standards” and appoint an independent ombudsman, selected by both families and the board, to ensure adherence to those standards, according to the filing. The addition of an ombudsman mimics a concession made by Skydance and Paramount to receive FCC approval of their deal.
Cable trade group ACA Connects panned Sinclair’s offer in a release Monday. “Sinclair is brazenly seeking a mega-footprint nationwide and in local markets across the country, which will allow them to impose even more exorbitant retransmission consent fees,” said President Grant Spellmeyer. “Just like the Nexstar and Tegna merger, the government should reject this deal and ensure the broadcaster media marketplace remains fair and competitive.”