Sinclair Launches Small-Market Station Group - Broadcasting & Cable

Sinclair Launches Small-Market Station Group

$99 million for Cox quartet to launch 'Chesapeake TV'; opportunities out there in the smaller markets
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Sinclair Broadcast Group has launched Chesapeake TV, a station
group focused on small-market stations, including the four that Sinclair
agreed to acquire from Cox Media Group (CMG) Feb. 25.
The acquisition, for
$99 million minus $4.3 million of working capital adjustments, comprises KFOX
El Paso, WJAC Johnstown, KRXI Reno and WTOV Wheeling/Steubenville, representing
a range of markets from No. 91 to No. 158.

The license assets of KAME Reno will be purchased by
Deerfield Media, while Sinclair will provide the services to KAME that CMG has
historically provided.

"We have prided ourselves on being a forward-looking
company with a history of creating innovative ways to unlock value for our
shareholders. We have established Chesapeake TV as the primary operating entity
for the CMG stations and other small market stations we may acquire, while STG
will continue to be our primary operating entity for mid-sized market
stations," said David Smith, Sinclair Broadcast Group president and CEO.
"We believe a dual operating structure is critical to the success of a
small market strategy since the economics and competitive nature can differ
from those of the mid-sized markets."

The Cox deal is subject to regulatory approval. 

Sinclair and Deerfield Media work closely in several
markets. Deerfield agreed to acquire WUTB Baltimore from Fox Television
Stations late last year; Sinclair will operate WUTB through a shared-services
agreement.

"Over the past 18 months, we have led the industry's
consolidation efforts in the mid-sized markets, purchasing 30 TV stations and
creating over $400 million of equity value," said Smith. "We believe
there are many more opportunities to acquire quality assets and to unlock
hidden value, including in the smaller markets, such as where the CMG stations
operate. We believe our platform size and leadership position allow us to bring
meaningful purchasing power and negotiating leverage to these stations.
Including synergies, we believe the CMG stations can generate approximately $20
million of cash flow, on average."

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