Sinclair Responds to Senator Kerry

Jan 11, 2010, 08:10 ET from Sinclair Broadcast Group, Inc.

BALTIMORE, Jan. 11 /PRNewswire-FirstCall/ -- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today released a copy of a letter sent on January 8, 2010 to Senator John Kerry from David Smith, President and Chief Executive Officer of Sinclair. In his letter, Mr. Smith addresses the Mediacom retransmission dispute and the need to allow the free market to work without government intervention.

About Sinclair:

Sinclair Broadcast Group, Inc., one of the largest and most diversified television broadcasting companies, owns and operates, programs or provides sales services to 58 television stations in 35 markets. Sinclair's television group reaches approximately 22% of U.S. television households and is affiliated with all major networks. Sinclair owns equity interests in various non-broadcast related companies. The Company regularly uses its website as a key source of Company information and can be accessed at www.sbgi.net.

Below is the full text of Mr. Smith's letter to Senator Kerry:


    January 9, 2010

    The Honorable John F. Kerry
    United States Senate
    218 Russell Senate Office Building
    Washington, D.C. 20510

    Dear Senator Kerry:

    I am writing in response to your letter of December 30, 2009.  I am
     also writing to address the position of Mediacom as set forth in the
     letter you received on January 7th from their CEO.

    Although we share your concern for the public interest and are
     pleased to have reached agreement with Mediacom, I trust you can see
     through Mediacom's blustery rhetoric to understand that their true
     interest lies not in serving the public interest, but rather in
     maximizing their profits by receiving government intervention to
     avoid paying fair, market-driven consideration for the right to
     retransmit broadcast television programming.

    Mediacom's argument essentially boils down to a self-serving claim
     that because local broadcast stations are free over-the-air this
     should give a private, for profit company like Mediacom a special
     right to use this programming without paying an appropriate fee to
     do so.  Were this the case, video bootleggers could simply record
     popular broadcast programming over-the-air onto DVDs and sell
     boxed sets of the entire season at prices far below the selling
     price of those who actually pay to acquire the valuable rights to
     sell such programming.  Similarly, XM Satellite Radio would have no
     need to produce its own programming since in the world envisioned by
     Mediacom, XM could just rebroadcast popular programming that it
     picks up for free over-the-air from broadcast radio stations.
     These examples point out the absurdity of Mediacom's position and
     aptly illustrate that although broadcasting is free to the public,
     this provides no special right for a private business to use such
     programming in a for profit enterprise.  In fact, taking away this
     special right was precisely the intent of the law Congress passed in
     1992 establishing the retransmission consent regime.

    Mediacom uses programming from broadcast stations as one of its most
     important assets in attracting and retaining subscribers.  That this
     is the case is clear from the public interest in the recent
     negotiations between Sinclair and Mediacom.  Nonetheless, Mediacom
     pays broadcasters much less than they currently pay for many program
     streams which are far less important to their customers.  This
     disparity seems fundamentally unfair to us.

    The promise of the 1992 retransmission consent legislation - that
     broadcasters would receive fair compensation - has yet to be fully
     realized, but we believe the free market is finally beginning to
     move in that direction.  The recent success of FOX in receiving
     compensation from Time Warner Cable for its highly rated stations,
     coupled with the decision by Cablevision to remove The Food Network
     and HGTV from its line-up rather than pay exorbitant price
     increases for these low rated programming services reflect a
     movement toward a resetting of program acquisition fees consistent
     with consumer demand.  Such a redistribution of fees, delayed as it
     has been by prior Federal law (which allowed cable companies to
     retransmit broadcast stations without obtaining permission or paying
     compensation) and the monopoly position of cable providers during
     most of the 1990s, has been a long-time coming and will require
     more time to occur fully.  Allowing this to happen, however, through
     powerful free market forces unfettered by government interference,
     will truly meet the public interest by ensuring that cable companies
     properly allocate the public's money to pay for the most popular and
     demanded programming.

    Although Sinclair is pleased to have reached agreement with Mediacom,
     a company which clings to the past practice of underpaying for its
     most important revenue generating assets and which has had other
     issues acquiring the right to broadcast programming popular with its
     customers, such as the NFL Network and the Big 10 Network, I do not
     agree that the failure to have reached agreement would have meant
     Sinclair neglected the interests of the public that rely on our
     stations.  Nor do I agree with Mediacom's claim that had agreement
     not been reached, that Mediacom's customers would have been denied
     access to programming.* These stations are available to the public
     completely for free over-the-air, as well as from numerous
     competitors of Mediacom that have reached agreement with Sinclair
     without seeking government intervention.

    I understand from press accounts that following the announcement of
     the Time Warner Cable/FOX negotiations you indicated an interest in
     speaking with those parties in order to better understand the
     situation.  Sinclair would be pleased to also be part of such
     discussions with you and your staff, in order to provide you with
     our insights on the retransmission consent process.

    Thank you for your interest in this matter.

                                             Sincerely yours,

                                             David D. Smith
                                             President and CEO

* Mediacom's continued efforts to paint Sinclair as the bad actor in all of this does nothing more than point out the disingenuous and partisan nature of their claims. Characterizing a failure to reach agreement as Sinclair denying programming to Mediacom subscribers is no more accurate than describing the situation as a denial by Mediacom. In the same way Sinclair takes the position that Mediacom cannot carry a station unless Mediacom pays a price acceptable to Sinclair, Mediacom is taking the position that Mediacom will not carry a station unless Sinclair receives a price that is acceptable to Mediacom.

SOURCE Sinclair Broadcast Group, Inc.



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