As it continues to consolidate its news operations into a centralized model and reduce staff while also operating its digital stations at low-power to save money, the Sinclair Broadcast Group is investing $20 million cash in an auto dealership holding company controlled by its Chief Executive Officer David Smith.
Reuters News Agency reported that Sinclair said the move to buy a 17.5 percent equity stake in closely held Summa Holdings was scrutinized by a special board committee and outside legal counsel. As part of the arrangement, Summa has agreed to buy an unspecified amount of advertising on Sinclair's television stations.
With its continued insistence that the technical specifications of the U.S. transition to digital television broadcast industry transition needs to be changed, many blame Sinclair for stalling the nation's transition. Sinclair wants the FCC to allow stations to choose between the ATSC-approved and government-mandated 8-VSB modulation standard and the European COFDM standard. They claim COFDM would do a better job of propagating the DTV signal into consumers homes in densely populated areas. After much debate, the FCC ruled that the ATSC system would stand, although, recognizing a number of technical deficiencies, said it hopes that continued R&D will improve the system.
Citing the high cost of the transition while few consumers are watching their over-the-air signals, all of the Sinclair stations now on-the-air in digital have done so using low-power transmitters from a company it owns, Acrodyne Industries (Ai).
With the new investment, Sinclair will get a seat on the board of Summa, a holding company that owns dealerships, retail tire franchises and a leasing company. The $20 million investment will be used by Summa solely to buy automobile dealerships, said Sinclair, which owns and operates or provides programs or sales services to 62 U.S. stations.
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