Sinclair gets bigger with Tribune acquisition
To reach more than 70% of US households
NEW YORK: In an era of information saturation, when cable news seems ubiquitous and Twitter posts stream forth uninterrupted, local television still holds a powerful grip on the American consciousness. And Sinclair Broadcast Group Inc just tightened its grasp.
The largest owner of local television stations in the United States, Sinclair said on Monday that it had agreed to buy Tribune Media Co for $3.9 billion, beating out other suitors including Nexstar Media Group Inc and Twenty-First Century Fox Inc.
With the deal, Sinclair would reach more than 70% of American households, with stations in many major markets, including Chicago, Los Angeles and New York, giving it significant heft at a time of increasing consolidation in the industry.
The acquisition would also provide Sinclair with a far-reaching platform for its news programming. A Pew Research study last year showed that almost 60% of adults get their news from television, and of those, almost 50% rely on local stations.
That has stoked concern about the pitfalls of consolidation, with some pointing out that Sinclair has shown a willingness to use its 173 stations to advance a conservative-leaning agenda.
Opponents of the deal have cited examples like Sinclair’s hiring of Boris Epshteyn, a former spokesman for President Donald Trump, as its chief political analyst and the on-air commentary of Mark Hyman, a former Sinclair executive who provides reliably conservative arguments on dozens of Sinclair stations.
“It’s an incredible amount of power in one company’s hands,” said Craig Aaron, president of Free Press, a consumer advocacy group that has opposed the deal.
He added that Sinclair, based in the Baltimore area, had a tendency to “centralise things as much as they can,” saying it produced stories from its headquarters with a clear conservative slant.
Michael Copps, a Democratic commissioner on the Federal Communications Commission from 2001 to 2011 who is now a special adviser to the nonpartisan consumer group Common Cause, called the planned merger “another blow to the diversity of journalism that we should have.”
“It’s symptomatic of what is happening in this market,” he said, “which is fewer and fewer organisations controlling more and more of the information on which our democracy rests.”
Sinclair will acquire Tribune Media’s 42 stations and its prize asset, WGN America, a network based in Chicago that broadcasts nationwide.
Some analysts and executives have speculated about whether Sinclair would repurpose the network to become a rival to Fox News, or possibly become a landing spot for conservative commentators like Bill O’Reilly.
When Fox News ousted O’Reilly amid allegations of sexual harassment, he did not have a non-compete clause in his separation agreement.
People with knowledge of the bidding have said that Sinclair had not expressed any plans to compete directly with Fox.
Some analysts and media specialists discounted the idea that political ideology shaped Sinclair’s approach, saying the expansion was more likely motivated by business considerations.
“This is about a play to get bigger because the world requires scale,” said Michael Nathanson, a media analyst.
In the last several years, cable and telecommunications companies have consolidated, and analysts predict that the Sinclair-Tribune deal could set off another wave of combinations, with groups like Nexstar, Tegna Inc, (which was formed when Gannett Co Inc split into a newspaper division and a television company), Cox Communications, Hearst Communications Inc and Meredith Corp jostling for deals.
“This combination creates the largest TV broadcast company in the country,” said Christopher Ripley, chief executive of Sinclair. “And as you all know, scale matters in this industry and the media in general.”
Tribune would be the latest acquisition for Sinclair, which has often turned to mergers to build its empire.
The broadcasting company has spent more than $7 billion on takeovers since 1996, excluding the Tribune deal, according to data from Standard & Poor’s Global Market Intelligence.
As part of the deal, Sinclair also acquired Tribune’s minority stake in the Food Network.
Under the agreement, Sinclair will pay $35 a share in cash and 0.23 of one of its class A shares. The final bid was valued at about $43.50 a share, up about 26% over Tribune’s stock price before reports of merger talks.
The deal is expected to close by year’s end, pending approval by Tribune shareholders, the Federal Communications Commission and antitrust regulators at the Justice Department.
For Tribune Media, a deal with Sinclair could be the coda for a company that was the television arm of the Tribune behemoth that published newspapers including The Los Angeles Times and The Chicago Tribune.
“I think it’s probably the first of a variety of combinations that will take place in local broadcasting that will better allow local broadcasters to compete,” Peter Kern, Tribune’s chief executive, said in an interview.
The company began to explore selling itself last year, recognising that it could become an attractive takeover target should consolidation increase, said two people with knowledge of the process.
The presidential election and the promise of a Republican-led FCC loosening regulations increased the possibility of a deal frenzy.
Several weeks ago, Tribune formally put itself up for sale, drawing interest primarily from Sinclair and Nexstar. But late in the process 21st Century Fox, in partnership with the Blackstone Group LP, a private equity firm, jolted the proceedings by joining the talks with Tribune.
Interest in Tribune was heightened late last month when the FCC eased rules on how many stations an owner may have.
But Fox and Blackstone, whose potential bid involved a complicated joint venture, could not work out a suitable financial arrangement and did not make a bid, the people with knowledge of the process said.
One of the people said the competition was always between Sinclair and Nexstar, and that Fox’s late entry into the bidding did not ultimately drive up the price.
Nexstar appeared to have the upper hand, the person said, until Sinclair proposed $43.50 a share on Saturday, sealing the deal.