Analyst: Sinclair Greed May Lead to Retrans Fix

BTIG’s Greenfield says playing field could be leveled after Dish complaint

The massive blackout of Sinclair Broadcast Group stations could be the catalyst for government action that levels the playing field on retransmission consent negotiations that have been overwhelmingly favorable to broadcasters up till now.

In a research note, BTIG analyst Richard Greenfield says that with the FCC and Congress already looking at the cost of the cable bundle, the latest dispute with Dish Network could be the straw that breaks the camel’s back. This morning FCC chairman Tom Wheeler said he directed the commission’s Media Bureau to have an emergency meeting with Sinclair and Dish to restore programming to consumers.

“Sinclair’s actions vis-à-vis Dish look to us like lighting a match in a dry brush field,” Greenfield says. “The government is looking for reasons to get more involved to help consumers. Sinclair may have finally given them a blatant enough excuse.”

The result of what Greenfield call's Sinclair's greed could be bad for all broadcasters and help distributors. “It could very well lead to a reform of retransmission consent negotiations that helps level the lopsided playing field,” he said.

Greenfield says Sinclair has committed “blatant” retrains violations by seeking not only to negotiate for the stations it owns directly, but to increase its leverage by including stations it does not own in the discussions. In addition, Dish claims in an FCC filing that Sinclair is also seeking fees for a cable network it doesn’t own or operate at this time. That could be a violation of antitrust laws, Greenfield notes.

“At first blush, Sinclair’s actions sound crazy,” says Greenfield, who tries to identify what is motivating the broadcaster.

Sinclair might be afraid of the rising level of reverse compensation the broadcast networks are exacting from their affiliates. Greenfield figures that Sinclair is trying to use its retrains rights to generate fees with a cable channel that the network couldn’t get a chunk of.

Or Sinclair could simply be overplaying its hand, strengthened by the onset of football season. But Greenfield says Sinclair has misread the new regulatory environment and met its match in Dish’s Charile Ergen, who tends not to roll over in a fight.