Upon Bob Simmons retirement, David Smith became CEO, and the Smith family vision began to take hold as we grew from three television stations to 59, becoming the largest television broadcaster in the country. It was during this time that we went public, the Telecommunications Act was passed and the transition from analog to digital television began.
David Smith was elected to succeed the retiring Bob Simmons. David’s vision of building Sinclair by adding more television stations began in earnest as he entered into one of the country’s first major market Local Marketing Agreements (LMA) with WPTT-TV in Pittsburgh, a visionary new strategy that would build value for our company and the local community by enabling Sinclair to program a second station in a market where it already owned a station, pursuant to FCC rules.
Sinclair acquired four stations including adding two LMAs in Milwaukee and Baltimore, thereby doubling our size.
In June, rapidly growing Sinclair went public with 13 TV stations in eight markets, realizing approximately $111.5 million to fund future acquisitions. That same year, we added five more stations in four markets.
The passage of the Telecommunications Act of 1996 was one of the industry’s biggest catalysts for change, providing for some deregulation and allowing us to make more acquisitions. Within 10 years of being formed, we became the nation’s largest commercial television broadcasting company not owned by a network when we acquired River City Broadcasting. The acquisition of River City also launched us into the radio industry. We now owned 28 television stations in 21 markets and 23 radio stations in 7 markets. The economies of scale enabled us to improve margins and maximize programming power.
The Federal Communications Commission (FCC) approved the shift of the television industry from analog to digital television broadcasting (DTV) by granting the first digital licenses to broadcasters. While the industry model focused on high definition television (HDTV), given our technical expertise, we proposed multi-channel television as an added digital television capability and business model.
We again doubled in size with such acquisitions as Heritage, Sullivan Broadcasting and Max Media, establishing our company as one of the largest television broadcasting companies in the United States and one of the top 10 radio broadcasters with 59 television stations in 39 markets and 51 radio stations in 10 markets.
With continuing growth, our headquarters was moved from the WBFF studios to a newly-built location in Hunt Valley, Maryland, where we reside today. In that same year, we divested our radio group to strengthen our balance sheet and to focus on our television platform and the roll-out of digital television. The radio group sale was valued at a historic approximate 19x broadcast cash flow.
With the transition from analog to digital underway, our engineers attempted a demonstration of the country’s new digital broadcast in Baltimore, which unexpectedly failed. As a result of that failure, we conducted a series of tests in Philadelphia and Baltimore and determined that the FCC-adopted 8VSB digital standard could not be received in environments where simple multi-path existed. With test results in hand, we led a broadcasters’ petition to the FCC to enable broadcasters the opportunity to adopt the COFDM standard, a more robust and flexible standard used elsewhere around the world.