EXCLUSIVE: Sinclair CEO criticizes The FCC and says local TV News economics are under threat.

Chris Ripley talks to The Media Mix about competing "in a land of giants."

Sinclair’s CEO Chris Ripley is blasting the FCC for blocking station groups from having a chance at competing against global streamers such as Apple and Netflix. 

The Baltimore, MD., based company is prevented from growing its footprint much beyond where it is today because of the FCC’s interpretation of current media regulations, Ripley said in a phone interview with The Media Mix. Meanwhile the streamers are pushing around the globe for viewers, subscribers and ad partnerships. 

“We have a one billion dollar market cap at Sinclair and Netflix has a $187 billion market cap,” said Ripley.  “Pick another company. Disney is $162 billion, Comcast is $168 billion, and Apple is approaching three trillion.” (Sinclair’s market cap on Thursday, June 22 was $784 million.) “The regulations reflect the world as it was thirty years ago,” he added, “We are competing in a land of giants.”

Another station group, Tegna abandoned its attempt at a get together with hedge fund Standard General after the FCC delayed decision-making on the deal. (The FCC also tanked Sinclair’s efforts to acquire Tribune back in 2018.)

“We are stifled by the FCC’s view of the world and antiquated rules that keep the industry artificially small and create an unlevel playing field with big media and big tech which are our primary competitors,” he said. Ripley seems to suggest that future investment in broadcast stations could be at risk. 

Earlier this month, Sinclair re-organized its operations, dropped the “Broadcast Group,” piece of its name and placed its broadcast stations in a separate structure from its other assets which include Diamond Sports Group, which houses the Bally Sports branded regional sports networks. 

“We’re going to be investing on the venture side of the house and growing the business over there,” he said. Ripley warns that local TV news is under threat by the current marketplace because stations are struggling. “It’s increasingly hard to support local news in the marketplace as big tech siphons off advertising and audiences,” he said. “It’s becoming uneconomic if you are a third or fourth ranked player. You’re not making money.” 

He added: “We need regulators to recognize that the market has changed.” Media regulations have other negative ramifications for local broadcasters. Because of a loophole, Sinclair can’t negotiate its own deals with virtual cable bundles like YouTube TV. Those deals are executed by affiliate partners such as Disney, NBCUniversal and Fox. “It’s another example of an unlevel playing field. We are partners with big media but we’re also competing for ad dollars, and subscriptions. It’s something that needs to be fixed within the industry,” he said. 

Ripley wants Sinclair to compete on a national basis so it can roll-out what’s called NextGen TV which allows stations to produce more personalized TV content with interactive features for viewers along with data services, he said. “Having to cobble together partnerships and very exotic relationships in order to cover the whole country, that doesn’t exist in the wireless world. AT&T, Verizon, T-Mobile, they all have national footprints.”

Sinclair acquired 21 regional sports networks from Disney for $10.6 billion in 2019 only to see them wind up in bankruptcy. They are currently part of Diamond Sports Group, which filed for bankruptcy in March.

Ripley explains what went wrong. The pandemic halted sports, caused a massive spike in streaming, accelerated cord cutting and led consumers to ax packages with regional sports, Ripley said. 

Meanwhile Sinclair was stuck in huge rights deals with MLB teams it could no longer afford to pay. Ripley can’t say much about the present situation. He says he’s just one board member at Diamond Sports, which operates the RSNs but he adds: “I don’t think the leagues are best served doing their own service.” Diamond Sports is cutting ties with a MLB team, according to Sportico. 

Does he wish he’d done the RSN deal in hindsight? “You can always look back. If you had had a status quo market environment it would have been phenomenally successful. Things changed, unexpected things happened, and you deal with it the best you can. At the time it looked like a great transaction.” 

There are reasons for optimism despite the regulatory environment and the struggles at Diamond Sports. The Tennis Channel has moved out of the company’s broadcast division into a new unit, to help it realize a higher multiple than the broadcast business and there are expansion plans, said Ripley. 

The Tennis Channel is adding more territories each quarter, it is already established in Germany, Austria and Switzerland. “International is a massive opportunity for Tennis Channel,” said Ripley, adding that the service will go fully direct-to-consumer next year. Pricing has yet to be shared.

There’s also a Pickleball channel coming to the US as a streaming channel, and Sinclair is looking at creating a similar property called “Paddle,” for Europe. And of course, Sinclair can look forward to the usual bump from political advertisers every other year. “So far we’re seeing a record amount of fund raising,” adds Ripley. 

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