Sinclair's Tribune Buy Seen Helping Commercial Prospects for ATSC 3.0

Sinclair's proposed buy of Tribune Media for $3.9 billion (see 1705080018), if it goes through, would improve prospects for ATSC 3.0 and fit with plans for a nationwide consortium of broadcasters supporting the new standard, but may not be a requirement for 3.0’s success, attorneys, analysts and broadcast officials told us. “Tribune provides markets where Sinclair doesn’t have coverage,” said BIA/Kelsey Chief Economist Mark Fratrik.

Sinclair executives have cited the need to have a national footprint to maximize the potential of the new standard, especially for applications beyond broadcasting (see 1703150067). “If you look at wireless companies as our competition, you need coast-to-coast availability,” Sinclair Vice President-Advanced Technology Mark Aitken has said. Tribune and Sinclair have been longtime supporters of 3.0, ATSC President Mark Richer said.

As of last week, the consortium includes Sinclair, Nexstar and new member Univision (see 1706010079). With those broadcasters and Tribune’s stations, the consortium would have “90 percent penetration” of U.S. homes, said Justin Nielson, senior researcher for S&P Global Market Intelligence. Tribune offers stations on the West Coast where Sinclair doesn’t have stations, Nielson said. Though Nielson was referring to stations’ broadcast signal, industry officials said the real potential for ATSC 3.0 is in data. The new standard and efforts like the consortium are intended to allow broadcasters to combine their spectrum to deliver data, allowing them to compete and to cooperate with wireless carriers, an industry official said. To do that, broadcasters need nationwide coverage comparable to an entity like AT&T. Sinclair and Tribune didn’t comment. One condition of joining the consortium is agreeing to broadcast in 3.0, industry officials said.

Sinclair likely doesn’t need to buy Tribune to join forces with it on ATSC 3.0, Fratrik said, but it would ensure more stations are on the same page. Varied entities have different business plans for the new standard, he said. Tribune was a supporter of the effort to transition to the new standard before the deal started to coalesce, an industry official said. “I think it will occur and be successful in the long-term with or without the deal,” he said of the new standard. Sinclair/Tribune would mean the standard has the backing of a strong company and wider adoption, Fratrik said. Both would help make it more viable in the eyes of device manufacturers and consumers, he said.

MVPDs have expressed concern about the 3.0 transition and are expected to oppose Sinclair/Tribune, but it’s not clear how the deal would affect pay-TV acceptance of the new standard. The combined company likely would have more leverage in retrans agreements, and pay-TV providers expect such agreements to be one means broadcasters will use to pressure MVPD retransmission of the new standard, a subscription-video attorney said. That’s likely to be a concern for larger pay-TV entities, but not all of them, the attorney said. It’s also possible the FCC could restrict the inclusion of terms requiring 3.0 retransmission in retrans deals, as is mentioned in the NPRM (see 1705170051). If Tribune was already likely to make the jump to the new standard, its buy by Sinclair won’t mean much of a change for MVPDs where the new standard is concerned, the lawyer said.