Tribune Media terminates $3.9B Sinclair deal, files lawsuit

10 August, 2018, 08:45 | Author: Donna Miller
  • Tribune Media terminates deal to be bought by Sinclair

Tribune Media on Thursday pulled out of a deal to acquire Sinclair Broadcast Group, and is suing for breach of contract, after the group came under scrutiny from US regulators.

Sinclair Broadcast Group Inc. wanted the Chicago company's 42 TV stations and had agreed to dump nearly two dozen of its own to score approval by the Federal Communications Commission.

If no divestitures were made, "the combined company would reach 72 percent of United States television households and would own and operate the largest number of broadcast television stations of any station group", the FCC notes. "Further delay and uncertainly would be detrimental to our company, our business partners and our shareholders, and accordingly, our board made a decision to terminate the merger agreement with Sinclair".

Tribune seeks compensation for all losses incurred as a result of Sinclair's material breaches of the merger agreement.

"So sad and unfair that the FCC wouldn't approve the Sinclair Broadcast merger with Tribune", Trump tweeted.

The Maryland company did not immediately respond early Thursday to a request for comment from The Associated Press.

According to Axios, Tribune is also filing a lawsuit against Sinclair, alleging breach of contract. Here, the WGN Radio sign appears on the side of Tribune Tower in downtown Chicago. Odds may have seemed to favor Sinclair partly because of the broadcaster's conservative leanings and Sinclair Chairman David Smith's meetings with President Donald Trump.

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On Thursday, Kern said the FCC order, which has been the death knell for previous media mergers, was the final straw for Tribune Media.

The company is "open to all opportunities" in terms of industry consolidation or remaining independent, Tribune Media Chief Executive Officer Peter Kern told investors on a call on Thursday.

Kern acknowledged that there would be "speculation" about who might buy Tribune, but urged employees to "shake off the cobwebs of deal distraction, ignore the outside noise, and continue delivering on our commitment to each other, to our customers, to our partners and to the communities we serve". The so-called sidecar agreement would have kept Sinclair essentially in charge of the Chicago station, with an option to buy it back for the same price within eight years.

Under the terms of the deal, Tribune and Sinclair had the right to call off the merger without paying a termination fee if it was not completed by August 8.

Sinclair said in a statement it did not mislead the FCC, but acknowledged the hearing process would've been a "long and burdensome process" and not in the best interest of Tribune's company and shareholders.

Had the merger with Tribune Media been approved, Sinclair would have completely dominated the local news market.

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