While large-scale dealmaking in radio has been slow the past couple of years outside of the Entercom/CBS Radio merger, the action has been heavy on the television side. As some of the biggest television operators reach the current limits of the amount of television they will need to look to other mediums to continue to grow their revenue streams.
That is why we are making the prediction that 2018 will be the year we begin to see the big television group operators acquire radio groups. Some television operators have seen the benefits of having integrated television and radio stations such as Hearst’s WBAL/WIYY/WBAL-TV Baltimore, Sinclair’s KOMO/KPLZ/KVI/KOMO-TV Seattle, Tribune’s WGN/WGN-TV Chicago and Tegna’s just purchased KFMB/KFMB-FM/KFMB-TV San Diego. With the FCC rule change in November to no longer count co-owned radio and television stations under the same market cap the ability to combine large radio clusters and television duopolies only becomes so much easier.
Should the Sinclair purchase of Tribune be approved that company will be nearly maxed out in terms of the amount of markets it can operate television stations in. With its primary revenue generator being local advertising how else can Sinclair increase its advertising offerings beyond its television stations and digital platforms? Why not with a purchase of Cumulus? Should Sinclair and Tribune’s deal be approved, a deal with Cumulus could give the company overlapping radio and television operations in as many as 57 of the 107 markets Sinclair will own television stations in across the country.
Sinclair once owned a 49 station radio group that it sold to Entercom and Emmis in 1999 and 2000 for over a billion dollars at the peak of radio consolidation which was used to pay down debt and further television growth. Sinclair has a blueprint for how combined television and radio operations can function in the Seattle radio holdings it gained from its 2013 purchase of Fisher Communications and its upcoming addition of WGN radio and television in the Tribune deal. A Sinclair/Cumulus combination could bring larger ad packages in multiple mediums as well as built-in crosspromotional platforms.
There are other benefits to Sinclair/Cumulus marriage. Cumulus’ network of Talk stations mesh perfectly with Sinclair’s conservative push. And as Sinclair has been the biggest proponent of the upcoming ATSC 3.0 television standard, it could use Cumulus and Westwood One’s programming to build a subscription audio service ala SiriusXM using television spectrum.
It doesn’t need to start with those two either. A company like Townsquare Media could be a great fit with a company like Gray Television with its fifteen overlapping markets or with a Nexstar and their twenty six overlapping markets.
Then there’s what will be left of 21st Century Fox following its $52.4 billion deal with Disney. Fox will retain the Fox and MyNetworkTV networks and their Fox Television Stations, Fox News Channel, Fox Business Channel and sports networks FS1/FS2 and will be in need of content to fill those networks and stations after divesting the Fox studios and libraries. So what about a marriage with iHeartMedia?
Fox and iHeart are already partners on many initiatives including Fox News Radio, Fox Sports Radio, and the music competition series The Four which debuts this week. Fox’ content needs can be partially filled from iHeart’s concerts and awards shows that currently air on other networks or any other projects they develop. iHeartMedia owns radio groups in fifteen of the sixteen markets where Fox owns television stations and that’s before any further station acquisitions that could come with the proceeds of the Disney sale.
These television groups also have something that Cumulus, iHeartMedia, Townsquare Media, or others like Alpha Media do not have. They are flush with cash on hand to make deals and have the confidence of Wall Street. With Cumulus in bankruptcy, iHeart on the verge, and Townsquare recently making a CEO change, none of those groups are in the best financial footing. Acquisitions from the big television consolidators would bring much needed financial stability to these companies.
that's the event that causes Fox News Channel Pundits to run to Sinclair and the Sinclair Pundits call for a boycott of New Fox and Disney!!
