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Fox, Sinclair Renew Affiliation Pacts in Five Markets but Larger Questions Linger

Sinclair Broadcast Group saw its stock price spike on Wednesday on the news that the powerhouse station group has renewed Fox affiliation pacts in five small markets.

The deal was seen by some as a sign of easing tensions between Fox and Sinclair, the largest owner of Fox affiliate stations with 39 at present. The new pacts include Sinclair’s participation in Fox’s effort to negotiate digital MVPD carriage deals for its entire affiliate body — an arrangement that suggests a measure of cooperation between Sinclair and the network.

Sinclair’s pending acquisition of Tribune Media will expand Sinclair’s sway over Fox’s distribution in a large chunk of the country, bringing the total number of Fox affils under its roof to more than 50. Fox made a last-minute effort to snare the Tribune stations away from Sinclair earlier this year.

Sinclair shares were up nearly 7%, or more than $2, on the news of the affiliation renewal, closing at $31.45.

There has been speculation that Fox would try to thwart Sinclair’s growth by re-aligning itself with other stations, such as the ION group, as its existing Sinclair affiliation deals come up for renewal. The five Sinclair markets that have been renewed are not markets where ION has a station: Columbia, S.C.; El Paso, Texas; Reno, Nev.; Albany, Ga.; and South Bend, Ind.

Other observers noted that affiliation deals tend to be done en masse, and Sinclair has numerous other Fox stations coming up for renewal by year’s end and next year. The five markets renewed were those with immediate contract expiration dates to address.

“If Fox were changing its business model or really contemplating taking its affiliations away from (Sinclair), we don’t think either party would have signed this deal, regardless as to its size,” Marci Ryvicker, Wells Fargo Equity Research senior analyst, wrote in a note issued Wednesday.

A Fox rep declined to comment on the news, which was announced by Sinclair’s Barry Faber.

“We are pleased we have reached this agreement with Fox, which includes the ability to participate in vMVPD deals,” said Faber, Sinclair’s exec VP for distribution and network relations. “We have had a long-standing relationship with Fox and this renewal reflects the mutually beneficial network-affiliate model, which marries together the network’s prime time and sports programming with our stations local news and syndicated content. We look forward to continuing to discuss with Fox the renewals of other affiliations which are up at the end of this year and in 2018.”

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