Sinclair is exploring merger options for its broadcast business

Signage is displayed outside the Sinclair Broadcast Group Inc. headquarters in Cockeysville, Maryland, U.S.Andrew Harrer | Bloomberg | Getty ImagesSinclair, one of the largest broadcast station owners in the U.S., is launching a strategic review of its broadcast that could result in a merger, the company said Monday.The company and its advisors have already held deep discussions with potential merger partners, according to people close to the matter who could not speak publicly due to the sensitive nature of the talks

Still, it's too early to determine a valuation for a potential deal, they added.At the same time, Sinclair is also looking to spin off or split its ventures unit, which includes pay-TV network the Tennis Channel and marketing nology Compulse

While Sinclair has had significant discussions with potential merger partners, there is no assurance a deal or spinoff will ultimately take place.Sinclair s were up nearly 13% in after market trading.The media industry broadly expects deregulation under the Trump administration, particularly in the broadcast space, which could usher in a wave mergers and acquisitions.Federal Communications Commission Chairman Brendan Carr has publicly said in recent months that he would support getting rid of broadcast station ownership rules and caps.Sinclair has 178 TV stations, which are affiliated with major broadcasters ABC, NBC, CBS, Fox and The CW across 78 .The company reported second-quarter earnings last week in which total revenue declined 5% to $784 million and total advertising revenue dropped 6% to $322 million.Broadcast TV station group owners have suffered in recent years as consumers continue to cut their traditional pay-TV bundles

Most stations make the bulk of their money from so-called retransmission fees, which are paid on a per-r rate by traditional TV distributors, Charter Communications and DirecTV, for the right to carry the stations

Advertising, particularly political advertising during local elections, also drives revenue for the companies.Sinclair has a market capitalization of roughly $875 million, with an enterprise value of more than $4.3 billion, according to FactSet

Its market value has dipped significantly as pay-TV rs decline.Last year, CNBC reported that Sinclair was working with Moelis and looking to sell more than 30% of its broadcast TV foot, or more than 60 stations

CEO Chris Ripley has said in recent earnings calls that the company was open to offloading parts of its or exploring deals.Other broadcast station deals may be in the works, too

Last week The Wall Street Journal reported that Nexstar Media Group, the biggest owner of broadcast TV stations, was in discussions to acquire Tegna, which has explored selling itself in recent years.