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Sinclair Gives Retrans Cut to ABC

HUNT VALLEY, MD.: Sinclair Broadcast Group, reached an affiliation agreement with the ABC Network for the renewal of nine ABC stations. It includes a licensing fee that represents a cut of retransmission revenue, according to Barry Faber, executive vice president and general manager of Sinclair. The model marks the first reversal, whereby stations are paying the network instead of the other way around.

“Although the agreement includes a license fee, based in part on retransmission consent revenue, we believe that the pass through to the networks of a reasonable portion of the fees that broadcasters receive is a necessary and appropriate way to make sure that the networks continue to be able to provide the most popular programming on television,” Faber said in Sinclair’s statement announcing the deal. “Over time, we expect that the fees paid by multi-channel video program distributors to acquire content will be reallocated so that the payments they make more closely correlate with the popularity of programming. As a result, the fees paid to broadcasters are likely to increase to more appropriate levels, which will allow affiliates to share these fees with the networks in a measured manner, while the local stations continue to benefit from this dual revenue stream.”

The renewal is through Aug. 31, 2015. The previous affiliate agreement between the two expired at the end of 2009. Programming continued as both parties agreed to extend that agreement until a new one could be hammered out. The deal covers affiliates in West Virginia, Illinois, Florida, Alabama, North and South Carolina, Ohio and Missouri.

“As one of ABC’s largest affiliate groups, we are pleased to renew our partnership with the network. We believe the length of this new term continues to demonstrate the robust viability of the network/affiliate model,” said David Smith, president and CEO of Sinclair. “The agreement will benefit our local market viewers by continuing to provide popular programming... and will help us to more quickly realize the value our programming... brings to multi-channel video program distributors.”

Sinclair said it doesn’t expect terms of the new agreement or the license fee to negatively impact the 2010 television station expense guidance provided in Sinclair’s Feb. 17 earnings release, which had already included an estimate for such amount.