Signage is displayed outside the Sinclair Broadcast Group Inc. headquarters in Cockeysville, Maryland, USA
Andrew Harrer | Bloomberg | Getty Images
Sinclair disclosed a stake in another broadcast station owner Electronic warfare scripts Monday, in an effort to push toward a merger of the companies.
Sinclair, which acquired a roughly 8% stake in Scripps according to the filing, recently launched a strategic review of its own business that could result in a tie-up. Scripps, for its part, has seen its struggles intensify in a competitive industry and is among the smallest of its peers.
In the filing, Sinclair said it has been engaged in “constructive” discussions regarding a deal and believes that, if an agreement is reached, a transaction could be finalized within nine to 12 months.
Sinclair said in the filing that, based on commercial multiples, synergies of $300 million would be expected if a merger were to take place.
Shares of Scripps rose more than 40% on Monday while shares of Sinclair rose 7%.
Sinclair, which acquired the stake for approximately $15.6 million, declined to comment beyond the SEC filing.
In a statement Monday, Scripps said its board “will take all appropriate actions to protect the company and its shareholders from opportunistic actions by Sinclair or anyone else.”
“The Scripps Board of Directors and management are focused on creating value for all of the Company’s shareholders through the continued execution of its strategic plan,” the company said in its statement. “The Board and management are committed to doing only what is in the best interest of all of the Company’s shareholders as well as its employees and the many communities and publics it serves across the United States.”
The statement added that the board continues to evaluate “any transactions and other alternatives that would increase the value of the company and would be in the best interests of all of the company’s shareholders.”
TV channel group owners have suffered, like the rest of media companies, in recent years from the abandonment of traditional pay-TV bundles in favor of streaming. These broadcast channels mostly derive their revenue from so-called retransmission fees, which are paid on a per-subscriber rate by traditional television distributors.
Broadcast station owners like Sinclair were eager to pursue mergers as they pushed for deregulation under the Trump administration.
In August, Nextstar Media Groupthe largest owner of these stations, agreed to acquire Tegna for $3.54 billion.
Sinclair, meanwhile, is also considering spinning off or spinning off its venture capital unit, which includes pay TV network The Tennis Channel and marketing technology company Compulse, recently renamed Digital Remedy.
Sinclair and his advisers held discussions with potential merger partners earlier this year, CNBC previously reported.