Cashing In or Not: Sinclair, Comcast Settle

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With barely one day to spare, Comcast and Sinclair Broadcast Group Friday reached an agreement that will allow about 3.4 million of the cable operator’s subscribers to keep viewing Sinclair’s TV stations.

While terms of the retransmission-consent deal were not disclosed, Comcast said it did not pay cash for the right to carry Sinclair’s television signals.

“Comcast has achieved its objective of not paying cash for broadcast carriage that would need to be passed on to our customers,” executive vice president David Cohen said in a prepared statement. “Consistent with our existing agreement with Sinclair and all of our other retransmission-consent agreements, comparable value is being exchanged.”

But Cohen’s contention was quickly disputed by Sinclair. “I would say he has seriously mischaracterized the deal,” Sinclair general counsel Barry Faber said in an interview.

Faber added that the company updated its projections for revenue from retransmission payments from Comcast and other cable operators this year to $53 million from its original projection of $48 million, partly as a result of this agreement.

The four-year deal, which expires March 1, 2011, calls for Comcast to carry multiple digital channels Sinclair is currently broadcasting in Richmond, Va., and Baltimore, as well as certain other multicast channels in Comcast markets that the stations may broadcast in the future.

The new deal also involves advertising and co-marketing agreements, including Web opportunities, as well as advertising and cross-promotion opportunities on both companies’ properties.

“We have always been willing to discuss exchanges of value with broadcasters,” Cohen said in an interview. “We have had with Sinclair an existing exchange of value where we’re paying cash but receiving marketing and advertising benefits back from Sinclair that are comparable in value to the payments we’re making. We were able to make a deal consistent with that model.”

But Faber said, “No way does what we gave them equal the value of what they’re giving to us. Our policy is that we get paid for retransmission consent, and simply giving us cash in exchange for inventory worth the same amount of cash, I wouldn’t have gotten anything.”

Comcast’s existing deal with Sinclair was set to expire March 10. If the two parties hadn’t reached agreement, Comcast was in danger of losing the right to carry Sinclair’s 37 stations in 23 markets -- mostly affiliates of Fox, MyNetworkTV and The CW -- in markets such as Baltimore; Pittsburgh; Minneapolis-St. Paul, Minn.; Nashville, Tenn.; Richmond, Va.; and Tampa. Fla.

Cable operators across the country were keeping a close eye on the negotiations. Sinclair has been one of the more aggressive station groups pressing for cash for retransmission consent.

Sinclair just concluded a three-month battle with midsized cable operator Mediacom Communications, in which cash is exchanging hands. Mediacom agreed to pay an undisclosed amount of cash per subscriber for the right to retransmit Sinclair TV signals to about one-half of its 1.4 million subscribers. The Wall Street Journal reported the range of the monthly payment to be 40-50 cents.

Cable operators in the past have said that if Comcast agreed to pay cash for the Sinclair signals, it would represent a fundamental shift in retransmission-consent negotiations.

“Those who would say that there is a sea change occurring in retransmission consent are premature in their assessment,” Cohen said.

Faber said he was “shocked” by some of Cohen’s comments. “Contrary to what Mr. Cohen has to say, we don’t do deals where we’re not paid for retrans,” he added.

“We will stand on the statement that comparable value has been exchanged,” Cohen said.

While terms were not disclosed, Sinclair had more to lose in a protracted battle with the nation’s largest cable operator. Sinclair stations represented just 15% of Comcast’s total 24.2 million-subscriber footprint, while the Comcast markets accounted for more than 30% of Sinclair’s total advertising revenue. In addition, Comcast carries another Fox station in the Baltimore-Washington, D.C., market, so losing Sinclair’s Baltimore Fox affiliate would have little effect on the cable operator.

The Comcast deal marked the third retransmission-consent pact Sinclair has closed this year with cable companies. In January, Sinclair signed a retransmission-consent deal with Time Warner Cable covering analog and digital signals for 35 stations in 22 markets, reaching 6 million subscribers. And in February, the broadcaster inked its deal, for cash for carriage, with Mediacom.

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