Sinclair Broadcast: Offers in the Air?

Is Sinclair Broadcast Group (SBGI ) on the block? It may be, if the Smith family wants to do a deal. Headed by CEO David Smith, the Smiths control 91% of the Class B voting stock. Some large institutions own Class A stock, including Neuberger Berman, with 15%, and Citigroup (C ), with 10%. The stock has tumbled--from 13.75 on Jul. 11, 2000, to 9 on Jun. 6, 2001--because of weak ad sales. The stock trades "at the lowest multiple in the TV group," notes Andrew Marcus of Deutsche Bank Alex. Brown. Yet he rates the stock a buy--because it is trading at only half Sinclair's estimated asset value of 16 to 20 a share. Sinclair owns 62 TV stations in 40 mid-markets, including major network affiliates. Fox affiliates account for 34% of broadcast revenues, and WB affiliates, 32%. Whispers are that a couple of media biggies have talked to Sinclair about a buyout. Its undervalued assets, plus some pending regulatory changes, make Sinclair a likely target, say these pros. Scott Davis of First Union Securities says that anticipated rule changes, such as lifting the national-ownership cap and the restriction on cross-ownership with newspapers, would make it possible for Fox or Tribune to buy Sinclair. CEO Smith wasn't available for comment.

By Gene G. Marcial

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