Sinclair Held Talks for Tennis Channel

Tennis anyone?

Sinclair Broadcast Group, the nation's largest owner of local TV stations, has had talks to buy the closely-held Tennis Channel, according to people familiar with the situation.

The on-again, off-again discussions have taken place over the last several months between Sinclair and private equity firms Apollo Global Management, Bain Capital Ventures, Battery Ventures, CCMP Capital and Columbia Capital, which are the majority owners of the Tennis Channel. Satellite broadcasters DirecTV and Dish Network Corp. also own small stakes in the network.

The talks are a sign of the increasing pressures on independent cable channels like the Tennis Channel to bulk up amid consolidation among pay-TV distributors who carry their programming. In addition, Tennis Channel competes with much bigger companies including Walt Disney Co.'s ESPN for sports rights.

For Sinclair, which would have a difficult time adding more TV stations to its portfolio without running afoul of a regulatory ownership cap, buying the Tennis Channel would offer a way to diversify its holdings and control more content, the people familiar with the talks said. Currently, Sinclair's stations are beholden to the major broadcast networks like NBC, CBS, Fox and ABC, which supply their most valuable content.

The Tennis Channel, which is available in about 35 million homes, has considered a sale for some time. However, finding someone willing to pay the premium its private equity owners are seeking has proved challenging. Its owners are seeking a price north of $500 million, a person with knowledge of the matter said.

A Tennis Channel spokesman declined to comment on what he characterized as speculation. Sinclair did not respond to requests for comment.

While the discussions between Sinclair and Tennis Channel are preliminary, the Baltimore-based broadcaster is clearly interested in growing beyond its roots. It owns a local news cable channel in Washington, D.C. and Tennis Channel was just one of several other cable channels Sinclair has looked at.

Sinclair owns or operates 164 television stations in 79 markets, including affiliates of ABC, CBS, Fox and NBC, giving it strong leverage in negotiations with pay-TV providers for carriage fees. This leverage could potentially help expand the footprint of the 12-year-old Tennis Channel, which to date has largely been relegated to a sports tier in pay TV packages.

However, that may prove challenging. Pay-TV distributors are pushing back against so-called bundling of channels and consumers are frustrated with growing bills for networks they don't watch.

Sinclair's plans to acquire a national cable channel came to light last month, in the course of a distribution fight with Dish Network. In explaining the brief blackout that left 5 million Dish customers without Sinclair stations, Dish said it had come to terms with Sinclair on fees to carry its TV stations but the broadcaster was holding out to get distribution for a cable channel it does not yet own.

Sinclair signaled its interest in investing in sports television last year with the formation of American Sports Network, a subsidiary that syndicates high school college sports content across both its owned stations and beyond.

Write to Keach Hagey at [e-mail] and Joe Flint at [e-mail]

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September 21, 2015 16:25 ET (20:25 GMT)

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