Wednesday, 17 October, 2018

Tribune Media Spikes Merger Deal With Sinclair, And Sues Its Former Suitor

Sinclair Broadcast Group’s headquaters in Hunt Valley Md Steve Ruark Associated Press Sinclair Broadcast Group’s headquaters in Hunt Valley Md
Ivan Hill | 10 August, 2018, 01:07

On Wednesday, Sinclair said it remained in discussions with Tribune about how to secure FCC approval of the deal, which has drawn wide-ranging criticism from across the political spectrum for how it would give the company access to so much of the nation's broadcast market.

The Sinclair-Tribune mega-merger appears to be dead.

'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 can not be completed within an acceptable time frame, if ever, ' said Tribune Media Chief Executive Officer Peter Kern.

The deal's termination, which scuppers Sinclair's efforts to dramatically expand, comes after criticism by Democrats and public advocacy groups over whether the merger was in the public interest. "Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable".

"In an effort to maintain control over stations it was obligated to sell if advisable to obtain regulatory clearance, Sinclair engaged in belligerent and unnecessarily protracted negations with DOJ and the FCC over regulator requirements... all in the service of Sinclair's self-interest and in derogation of its contractual obligations", the suit alleges.

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The deal was worth $3.9 billion for Tribune Media and would have added more than 40 stations including KTLA in Los Angeles, WPIX in NY and WGN-TV in Chicago to Sinclairs list of local affiliates. By one estimate, the combined company would have owned stations in almost 3 out of 4 USA households, controlling an enormous amount of the content Americans see on local stations. 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. "As elaborated in the complaint we filed earlier today, Sinclair's entire course of conduct has been in blatant violation of the merger agreement and, but for Sinclair's actions, the transaction could have closed long ago".

The FCC did not immediately comment on Thursday.

Tribune general counsel, Eddie Lazarus, told analysts on the same call the company was seeking a "large number" in damages from Sinclair. Sinclair defended the script as a way to distinguish its news shows from unreliable stories on social media.

The FCC raised questions after Sinclair had proposed to sell WGN to Maryland auto dealer Steven Fader, a longtime business associate of Sinclair Executive Chairman David Smith, as Sinclair would largely continue to operate the station under a services agreement. And the sales allegedly had strings attached that would allow Sinclair to retain significant control over the stations' operations and programming.

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