Sinclair Broadcast Group has "agreed to purchase independently-owned Tennis Channel" for $350M, acquiring the assets of the 24-hour channel, which "currently has 30 million subscribers," according to R. Thomas Umstead of MULTICHANNEL NEWS. Sinclair stated that it has already "negotiated agreements with a number of distributors to add an additional 20 million homes to the network’s subscriber count." Tennis Channel Chair & CEO Ken Solomon said of his role with the network, "I am not only staying I am committed to staying, excited to stay and I can’t wait for what’s next" (MULTICHANNEL.com, 1/27). In L.A., Meg James reports Sinclair "would like to increase the distribution of the channel to as many as 70 million homes." The growth of Tennis Channel, which has broadcast rights to all four Grand Slam tournaments, had "leveled off in recent years because the network, as a stand-alone channel, did not have sufficient clout with pay-TV distributors to demand full carriage." Some major pay-TV operators, including Time Warner Cable and Comcast, "relegated the network to a less-distributed sports package, which limited the channel's revenue because fewer subscribers received the channel." Additionally, larger TV networks, including ESPN, "aggressively bought the rights" to major tournaments, leaving Tennis Channel as a "boutique operation that primarily appealed to the most faithful tennis fans." Solomon said, "There were things we couldn't do because of our limited distribution. This deal unlocks that completely" (L.A. TIMES, 1/28). The HOLLYWOOD REPORTER's Kate Stanhope noted Tennis Channel, which "includes established over-the-top subscription services TC Plus and TV Everywhere," holds rights to 90% "of all the televised tennis in the U.S." (HOLLYWOODREPORTER.com, 1/27).
RIGHT IN LINE: In N.Y., Claire Atkinson writes the $350M sale price is "right at previous valuations, despite the owners seeking a sale" in excess of $500M. Tennis Channel is backed by Apollo Partners, Bain Capital and Battery Ventures (N.Y. POST, 1/28). BROADCASTING & CABLE's Jon Lafayette noted Sinclair estimated that the revenue "from the increased number of subscribers plus the higher advertising revenue from having higher viewership should increase cash flow" by $60M. Tennis Channel had about $200M in net operating losses "dating back to its start up." Sinclair will "take advantage of the tax benefits from those losses to reduce its own future payments to the government." Sinclair "figures those benefits are worth" about $65M (BROADCASTINGCABLE.com, 1/27).
CABLE CAR: The WALL STREET JOURNAL's Hagey & Flint noted Tennis Channel is Sinclair's "first foray into the national cable television market." The deal is a sign of the "increasing pressure on independent cable channels like the Tennis Channel to merge with bigger players as the pay-TV distributors who carry their programming consolidate." It also shows "how a new breed of growing local TV station 'supergroups'" like Sinclair and Nexstar Broadcasting Group "may look to diversify as they bump up against regulations limiting how many TV stations they can own." Sinclair in '14 "signaled its interest in investing in sports television" with the formation of American Sports Network, a subsidiary that "syndicates high school and college sports content across both its owned stations and beyond" (WSJ.com, 1/27). Sinclair Exec VP & General Counsel Barry Faber said that the company has been "looking to either buy or create a cable channel and found a good fit in Tennis Channel, given the value of live sports programming and the fact that, in Sinclair's view, Tennis Channel had a lot of upside potential with distributors." He added that he was "confident the channel would make gains with virtually all distributors as part of Sinclair's distribution talks" (MULTICHANNEL.com, 1/27).
