Policy

Comcast, Sinclair Near Digital, HDTV Deal

2/10/2005 5:10 AM Eastern

Comcast Corp. and Sinclair Broadcast Group Inc. are nailing down a long-term digital-HDTV-carriage deal that could serve as “a template” for the rest of the cable industry, an official at the broadcast company told analysts Thursday.

The nation’s largest MSO and Sinclair are in the process of finalizing an agreement in principle that they reached last week, which allowed Comcast to carry Super Bowl XXXIX in the six markets where the broadcaster owns or operates Fox affiliates: Baltimore; Pittsburgh; Nashville, Tenn.; Richmond, Va.; Charleston, N.C.; and Paducah, Ky.

During a fourth-quarter-earnings conference call Thursday, Sinclair CEO David Smith spoke in generalities when asked about the status of negotiations with Comcast.

“We made a short-term deal with them to be able to carry the Super Bowl because we believe they were clearly acting in good faith in an effort to construct a long-term deal with us, and my sense is that we should get that deal done,” Smith told analysts.

“I can’t tell you if it’s going to be in 20 minutes or 20 days,” he added. “But everybody’s working on it very hard and, in the end, if we do get it done, it will clearly be in Comcast’s best interest and our best interests.”

Both Smith and a Comcast spokeswoman declined to comment on whether or not the MSO will tender cash to carry Sinclair’s HDTV or digital signals.

“I’m just not going to comment on it … because I know Comcast’s sensitivity to disclosing these kinds of things and, certainly, it’s not in our best interest to disclose anything, given that we’ll be negotiating with 100 other cable companies -- systems -- in the next couple of years,” Smith said. “Actually, not in the next couple of years, it’ll be this year, because the retrans [retransmission-consent deals] end this year.”

Sinclair owns, operates or provides sales services to 62 TV stations in 39 markets.

“In the event that we do get a deal done with Comcast, my sense is that it will kind of lay the groundwork for every other cable company within our industry where we broadcast,” Smith said.

“My sense is that it’ll become somewhat of a template for other cable companies to look and say, ‘Well, if Comcast can do the following, then I guess we better be prepared to do the following, given that they’re the leader in the industry.’ So we’d like to get it done,” he added.

The Comcast spokeswoman said the digital-signal-carriage deal it is finalizing with Sinclair is comparable to the deals it has struck with other broadcasters.

During its conference call, Sinclair also voiced its support for Nexstar Broadcasting Group Inc., which has pulled the signals for several of its stations from Cox Communications Inc. and Cable One Inc. in a retransmission-consent dispute over cash for carriage.

“They deserve a lot of credit, and I hope they succeed,” Smith said. “I think [Nexstar president] Perry [Sook] is in a unique situation because he is using the opportunity that he has in small markets … In a three-station marketplace … it just seems to be that the consuming public’s view of the world is going to be, ‘If I can’t watch the basketball games on CBS or Desperate Housewives on ABC or whatever,’ they are not going to be deprived of that opportunity, and they will go where they have to go get it.”

He added that he’s heard some “staggering numbers” in terms of the defection of cable subscribers to direct-broadcast satellite in the markets where Nexstar pulled its signals.

“I don’t think that it really bodes well in the long term for the cable industry to want to do what they’re doing, from the standpoint of allowing these people to leave,” Smith said, “because once they leave, there’s no reason to come back.”

He welcomed the entrance of phone companies such as Verizon Communications and SBC Communications Inc. into the video business, pointing out that markets will have four direct competitors -- a cable company, a phone company and two DBS providers -- all offering TV services.

“We think in the long term, that’s a good thing for the industry to have four competitors who want our product, and I think that as those four competitors kind of carve up the marketplace, we’ve got to kind of stand in the middle and figure out how to take the best financial advantage of it that we can,” he added.

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