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'Sea of Blood'

ALJ Silence on Sinclair/Tribune HDO Won't Slow Sinclair M&A Moves, Says Ripley

Lack of a final decision from Chief Administrative Law Judge Richard Sippel on the Sinclair/Tribune hearing designation order won't slow or affect Sinclair merger and acquisition efforts, CEO Chris Ripley told us after speaking at NAB Show New York Thursday. Sinclair is “focused” on more consolidation in broadcast TV, and on adjacent growth avenues such as regional sports networks, cable and digital offerings, Ripley said.

The HDO requirement the ALJ provide a timeline for final decision 15 days after the parties involved submitted written appearances passed in August with no word from that office. The Enforcement Bureau signed off on Sinclair's request to terminate the hearing in August (see 1808100026). Bureau Chief Rosemary Harold said then the chief judge must “dispose of the designated applications” before the hearing can be terminated. Ripley said uncertainty about the outcome won't affect the company's choices. Sippel and the FCC didn't comment. Broadcast CEOs said Wednesday that what happened to Sinclair/Tribune was unlikely to be repeated yet may have hurt the industry's reputation (see 1810170052)

Sinclair remains a “vocal” proponent of deregulation, Ripley said Thursday: With broadcasters dwarfed by their competitor tech companies, “more consolidation has to be part of the mix.” Focusing on how many broadcasters vie to be No. 1 is “the wrong question,” because broadcasting and other media are meshing together. A broadcast space won't exist “in short order,” he said.

The ALJ proceeding means Sinclair must disclose it has an unresolved character issue on future license applications, which doesn't mean the FCC would necessarily reject those, Fletcher Heald broadcast attorney Dan Kirkpatrick told us.

Seamlessly combining broadcasting with content delivered through the internet will be a hallmark of ATSC 3.0, Ripley said. Linear terrestrial TV “is an antiquated experience in many regards,” and the industry has no incentive to promote it, Ripley said.

Prototype chips for devices to use 3.0 should be available for CES 2019, Ripley said. Sinclair is offering mobile carriers incentives to incorporate 3.0 technology into devices but lacks takers, Ripley said, though he's hopeful they will come aboard.

Sinclair's involvement with 3.0 consortium SpectrumCo will let broadcasters take advantage of the tech on a national scale despite “archaic” ownership regulations, Ripley said. He praised station groups announcing Wednesday they are committing to advance the standard (see 1810170047). Sinclair is “the happiest company in the world,” because of that commitment, said Jerald Fritz, executive vice president-strategic and legal affairs at its One Media.

Ripley touted Sinclair forays outside broadcasting. The company is rolling out an OTT news offering, Stir, with linear and on-demand programming to be available to 95 percent of the country. Sinclair's Tennis Channel and ownership of other tennis media and broadcast rights synergize with sports gambling, Ripley said. Tennis isn't widely associated with U.S. gambling, but “in the rest of the world, people bet on it like crazy,” he said. With those bets not just on the outcome of matches but also on in-match events such as individual serves, explosion in tennis betting would increase interest in Sinclair's tennis media, he said.

Ripley is bullish on sports content, but he said tech company involvement in producing other entertainment content turned that field into a “negative margin” business. Entertainment content is “a sea of blood,” Ripley said.

Enabled by a recent Supreme Court decision, sports betting is projected to become a $500 billion industry, said gaming industry officials and investors. Unregulated “black market” betting is conservatively estimated at $200 billion nationwide, and legal gambling is projected to handle more money, said FanDuel Chief Marketing Officer Mike Raffensperger.

Many companies have shifted revenue away from cyclical advertising to other higher margin and more recession-proof streams, said CFRA Analyst Tuna Amobi. Monetization of 3.0 is too far away for analysts to make projections about it or for investors to be interested, said Wells Fargo's Davis Hebert. “It's a wait and see approach.” TV executives are having trouble selling the investment community on the moneymaking opportunities of the standard, Amobi said.