FCC Has 'Serious Concerns' Over The Sinclair-Tribune Merger

by Wayne Friedman , July 16, 2018

Following an FCC statement of “serious concerns” over the Sinclair Broadcast Group/Tribune Media merger, both company stocks -- and other TV station groups -- witnessed sharp declines.

Tribune Media stock caved over 13% to $33.74 on early Monday morning trading, with Sinclair losing nearly 4.6% to $31.35. In May 2017, Sinclair announced a $3.9 billion deal for Tribune Media.

Ajit Pai, chairman of Federal Communications Commission, issued statement focusing on Sinclair efforts to sell TV stations to meet current FCC guidelines in order for the deal to proceed.

TV station groups are limited to owning stations representing 39% of U.S. TV homes.

“I have serious concerns about the Sinclair/Tribune transaction,” said Pai. “The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

Other big independent TV stations also registered lower share prices: Nexstar Media Group sinking 2.6% to $80.35; Tegna losing 5.4% to $11.31 and Gray Televison, off 2.1% to $15.33.

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2 comments about "FCC Has 'Serious Concerns' Over The Sinclair-Tribune Merger".

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Ed Papazian from Media Dynamics Inc, July 17, 2018 at 7:45 a.m.
John, with respect to commercial recall, it's important to ask recall of what?In almost every case that I have seen---many thousands of them----the viewer is asked to prove his/her recall claims by describing the basic message the commercial tried to convey. As you can't say very much in a 6-second commercial, even if "verified recall" was fairly high---like 60% of what you get for a 15-second commercial---- the selling power of the message remains in doubt. This was the experience of advertisers who tried to switch from "30s" to "15s" ---just to save money. The shorter length, was a useful reminder of the longer length exposures but, in many cases, could not be used exclusively as the brands' primary platform. Another issue is cost--or CPM. I doubt that the networks are going to offer 6-second ads at 40% of the CPM of 15s. More likely, they will try to charge 75% or thereabouts, making the shorties an even more dubious option---even if the commercial clutter issues can be resolved. The solution might be to offer 6-second spots only in very short breaks, along with a few others of similar length, but there are only so many breaks of this type that can be accommodated in an hour of programming while still cramming in enough cluttered breaks to make a profit for the seller.
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John Grono from GAP Research, July 17, 2018 at 8:57 p.m.

Hi Ed.

Don't you hate it when you post your comment on the wrong page. I know I have done it several times in the past.

I agree with the majority of what you say. The thing with the recall studies is the respondent is asked to describe the basic message. In a 30-second 'the message' is longer than in a 15-second. The issue becomes that 'the message' in a 6-second (or shorter ad) could just be the brand. Say it is the Nike swoosh that is shown for 6-seconds (and maybe with a tag e.g. Superbowl Day). The respondent answers 'Nike Swoosh' then that satisfies the research question, and probably the Nike strategy. It could be 'Ubiquity of Propinquity'.

You are also 100% correct about the CPMs. Here in Australia a 15" is charged at 60% of a 30". Id guess a 6" would be around third of a 30" (no ratecard yet as it is not offered yet).

My big beef is that the ARF is supporting a push for 6" on the basis of the 'recall-per-second' non-metric. And should 6" become 'de rigeur' then clutter would be an exponentially larger problem.