Sinclair Goes Digital and Multiplies

Sinclair Broadcast Group Inc., the company that has repeatedly tried to force its conservative political agenda into the homes of millions of television viewers, is now forging a deal with the nation's largest cable company that would allow Sinclair to increase – by over 500 percent – the number of stations on which it can broadcast its "news" content.

Undaunted by a recent federal decision to limit TV broadcasters' access to cable distribution, Sinclair is now putting in place a series of deals that would increase manifold the conservative media company's reach.

Last week, Sinclair President and CEO David Smith outlined the company's plans to open the cable pipeline to as many as five additional Sinclair channels for each of the 62 stations currently under the broadcaster's control. The move – as TV broadcasting continues its transition to a digital format – has the potential to grow Sinclair's considerable holdings to 372 stations.

During an investors call last Thursday, Smith spoke of one deal he's hammering out with Comcast Corp., the nation's largest cable television company. Though Smith spoke in generalities, it's clear that he hopes to win Comcast's agreement to carry Sinclair's full digital offering in the local markets where the conservative broadcaster and the cable provider have a presence.

Smith's move comes on the heels of a series of setbacks for the Maryland-based broadcaster. On the very day of Smith's investor call, the Federal Communications Commission (FCC) ruled that cable operators would not be obligated to carry the additional digital programming streams that local broadcasters will be able to offer. At the moment, cable companies are mandated to carry only one signal per local station. Broadcasters, including Sinclair, wanted the FCC to force cable operators to allow "multicasting," which means six digital stations can be compressed over a slice of public airwaves that formerly carried a single analog signal.

In lay terms, this process hands a local broadcaster the opportunity to program six times as much content. It's a potential boon to the commercial broadcast industry, but only if it can convince cable carriers – the means by which 85 percent of American households receive their television – to include the extra local stations.

Having thus far failed to do so via official channels at the FCC and in Congress, Sinclair is taking a new tack – striking deals directly with the cable carriers. And the Sinclair-Comcast deal is just the tip of the iceberg. "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 told investors last Thursday.

Cozying Up To Cable

"Last week's FCC ruling confirmed that cable is now king," Jeff Chester, executive director of the Center for Digital Democracy, says. "If you don't have digital distribution, you're out of business and Sinclair knows this."

Chester says that the future of television is in "T-Commerce," providing consumer-interactive content that allows viewers to pick what programs they want and when they want them on a pay-as-you-go basis. It was this content-on-demand model that provided much of the buzz coming out of the Las Vegas Consumer Electronics Show last month.

The cable industry has spent nearly $95 billion since 1996 to lay new two-way pipelines to consumers – with systems that allow audiences to select and pay (say $0.30 to $1) for each show they wish to watch. Now more than 91 percent of cable-ready homes in the U.S. have access to interactive television services that make content-on-demand possible – with more than a third of U.S. cable customers now subscribing to digital cable.