Sinclair Broadcast Group announced it has entered into a “definitive agreement” to acquire the cable outlet Tennis Channel. The station group, which has 171 TV stations in its portfolio, said it will purchase all of the channel’s stock for $350 million.
The deal is subject to antitrust regulatory approval and other customary closing conditions, and is expected to close during the current quarter.
Sinclair said in its announcement that it 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 present value which Sinclair estimates to be worth approximately $65 million.”
The announcement notes: “Tennis Channel is the only 24-hour, television-based multimedia destination dedicated to both the professional sport and tennis lifestyle. Tennis, which includes established over-the-top subscription services, TC Plus and TV Everywhere, has rights to 90% of all the televised tennis in the U.S. and features comprehensive coverage including the top 100 tournaments in the sport and more.”
Sinclair added that it has “already negotiated agreements with a number of multi-channel video programming distributors (MVPDs), which, following Sinclair’s acquisition, will increase carriage of Tennis from approximately 30 million homes to approximately 50 million homes.”
Sinclair CFO Chris Ripley commented: “The company expects 2015 pro forma operating cash flow for the contracted subscriber increases (including the additional license fees and advertising revenues resulting from such increased carriage) to be approximately $60 million, the synergies of which will be phased in over 18 months, and resulting in a 2015 pro forma purchase multiple, including the present value of the NOLs, of 4.8x and approximately $0.40 of incremental cash flow per share.”