Tribune nixes $3.9B tie-up with Sinclair
Tribune Media has called off the planned $3.9 billion sale of 42 TV stations to the Sinclair Broadcast Group, saying the nation’s largest broadcast chain breached its contract by misleading regulators during the transaction’s approval process.
Chicago-based Tribune said Thursday it filed a lawsuit against Sinclair, seeking to recoup losses that occurred during the failed merger discussions “including but not limited to approximately $1 billion of lost premium to Tribune’s stockholders and additional damages in an amount to be proven at trial,” the complaint says.
The deal, announced in May 2017, would have given Hunt Valley, Maryland-based Sinclair, already the nation’s largest U.S. broadcaster, a total of 215 TV stations and a reach of 71 percent of U.S. homes.
But last month, the Federal Communications Commission voted unanimously to send the deal to an administrative law judge for review after FCC Chairman Ajit Pai said he had “serious concerns” that Sinclair could unlawfully continue to control some stations it divested to achieve the deal’s approval.
Sinclair’s planned transfer of three TV licenses raised “significant questions as to whether those proposed divestitures were in fact ‘sham’ transactions,” the agency said in its order to send the merger to the judge. A transaction’s review by an administrative law judge often signals the demise of a deal.
“In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,” Tribune Media’s CEO Peter Kern said in a statement Thursday. “This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”
Tribune charges Sinclair with misleading the FCC or acting “with a lack of candor,” during the process.
The merger had attracted attention because of how it would expand Sinclair’s historic reach into U.S. homes, the conservative bent of the media company’s owners and their habit of requiring local TV stations to run corporate messages.