Sinclair Broadcast Group Acquires Tennis Channel for $350 Million

With the aim of boosting its cable-network strategy, Sinclair Broadcast Group entered into a definitive agreement to purchase the stock of Tennis Channel for $350 million. Tennis Channel, the 24-hour programming home for tennis enthusiasts, currently reaches approximately 30 million homes; acquisition by Sinclair will increase its carriage to approximately 50 million homes.

tennis-channel-logo“What makes Tennis all the more exciting and an extremely attractive property … is, it’s one of the only independently owned major sports networks left, which makes it a unique asset,” said Sinclair CFO Christopher Ripley on a senior-management call with investors, shareholders, and press. “Broadly speaking, we see a long-term opportunity to bring Tennis Channel’s economic model to a similar place as a peer network like the Golf Channel.”

Sinclair has already negotiated agreements with a number of multichannel video-programming distributors (MVPDs) that will increase carriage of Tennis Channel; several other agreements are on the horizon.

Tennis Channel provides coverage of the top 100 tournaments in the sport and will continue to provide complementary coverage of the four grand-slam tournaments alongside ESPN, NBC Sports, and CBS Sports. Although the major sports networks bid for the semifinal and final matches in each of the grand slams, Tennis Channel will maintain its individual sublicensing agreements and continue to broadcast the matches not shown on the major networks.

In addition to its 24/7 linear offering, Tennis Channel includes the established over-the-top subscription service TC Plus. Although there are no definite plans to enhance the OTT offering, Sinclair announced on the call that it will be an area of focus for the company.

“[Tennis Channel] has a very passionate audience, which is extremely important in the world of dealing with the MVPDs,” said Barry Faber, EVP/general counsel, Sinclair. “As we went through the process [of] trying to explore with the MVPDs us moving into the cable space, [from conversations regarding what] they would be most interested in us doing, tennis was the hands-down winner. I think that’s because they understand and agree that tennis is under distributed.”

According to an official release, Sinclair will benefit from more than $200 million of Tennis net operating losses, which Sinclair will be able to carry forward to reduce future tax payments, the current value of which Sinclair estimates to be worth approximately $65 million.

The transaction, which is subject to antitrust regulatory approval and other customary closing conditions, is expected to close during the first quarter and will be funded through cash on hand and a draw on Sinclair’s revolving line of credit. LionTree Advisors acted as financial advisor to Tennis Channel in connection with the transaction, as did Evolution Media Capital.

Sinclair also announced that Ken Solomon will remain as president of Tennis Channel and that his staff will join the Sinclair team.

“In Sinclair, we have found the perfect owner-partner to accelerate scaling the Tennis Channel brand and our sport’s expanding fanbase to the next level,” said Solomon in the official release. “Sinclair’s unique size and position in the media ecosystem will facilitate significant distribution growth towards parity with our competitive set and expand our brand’s assets and unique value as the go-to destination for all things tennis in the U.S. and beyond.

“The larger platform will immediately help develop incremental advertising and sponsorship business and puts us in a great position to enhance our already comprehensive rights portfolio domestically as well as develop the brand internationally,” he continued. “We also intend to utilize Sinclair’s advanced branding capabilities, digital expertise, and significant broadcast-asset platform to drive increased awareness for both Tennis Channel and our successful subscription- based OTT platform, Tennis Channel Plus. Our management team is more excited than ever about the future for Tennis Channel under Sinclair’s ownership and anxious to grow as part of such a visionary and transformative company. This is a great day for both the professional sport and the amateur tennis community and, most importantly, for the viewers we serve.”

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