Stations are Fox affiliates

NEW YORK — Seemingly without bounds, Sinclair Broadcasting’s appetite has brought it close to consuming USA Networks Inc.’s 57% stake in SF Station Group, sources close to the deal said.

Analysts say SF’s 43% shareholder, News Corp., may choose to sell as well. The total price for the four-station group is between $300 million and $330 million, analysts estimate.

All four of the SF stations are Fox affiliates, so the acquisition would extend Sinclair’s already heavy lineup of Fox affils. Neither Sinclair nor USA would comment Wednesday.

The acquisition would also be the second in just a couple of weeks for Baltimore-based Sinclair. Just last week, the company agreed to pay $1 billion in stock for Franklin, Tenn.-based Sullivan Broadcasting’s 13 TV stations — 10 of which were Fox affiliates.

“They have a heavy interest in Fox already. This gives them even more clout,” said Victor Miller IV, a media analyst for Bear Stearns.

Sinclair, with its buy of Sullivan Broadcasting last month, now provides Fox with 12% (23 affiliates) of its distribution. With the four Fox stations in an SF deal, that percentage would jump to 13.9% of its U.S. distribution.

The SF stations — WVUE in New Orleans, WALA in Mobile, Ala.; KHON in Honolulu and WLUK in Green Bay, Wis. — no longer fit into Diller’s strategic plan for his Home Shopping Network’s transaction-based programming nor USA Broadcasting’s hyper-local focus, a Silver King Broadcasting exec said.

For Sinclair though, the opposite is true; it is poised to reap the benefits of cross-ownership heft.

“It makes sense if it’s Sinclair,” said one media analyst, “since they already have a huge radio group in New Orleans.”

It’s not without irony that federal law may force Fox to sell even more stations to Sinclair, famous for causing sweaty palms among syndicators.

The Federal Communications Commission is considering approving a rule that would attribute ownership of a station if the owners exceed 33% of the capitalization of the TV station. Fox owns debt and equity in the SF stations amounting to 43% of their capital structure. If the FCC codifies the proposed rule, Fox would need to sell its stake in order to remain underneath the federally imposed ceiling limiting TV groups to 35% of U.S. households. Currently, Fox’s station group reaches 34.8% of all U.S. households.

Wall Street is not counting out Dan Sullivan, who may still swoop back in, flush with cash from the sale of the broadcast group that bears his name. Quorum Broadcasting, where Sullivan is now president and CEO, has made the acquisition of 50+ market stations its focus, having recently purchased Petrocom Broadcasting’s five, small-market TV stations.

“We are interested in SF,” Sullivan confirmed. “Diller knows we’re interested, and last I heard, is still trying to make up his mind.” Sullivan confirmed that Sinclair was also bidding for the group.

Fox station group officials declined to comment.

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