Tribune Withdraws From Sinclair Merger Amid Scrutiny Over Deal

Brenda Watkins
August 10, 2018

Facing potentially insurmountable regulatory hurdles, Tribune Media on Thursday pulled the plug on its merger agreement with Sinclair Broadcast Group and sued Sinclair for $1 billion.

FCC Chairman in July expressed "serious concerns" over the deal, saying Sinclair would still control the stations it divested in practice. In addition, Tribune said, Sinclair outright refused to sell station in some markets.

The FCC reportedly concluded that Sinclair may have misrepresented or omitted some facts in its applications in an attempt to get around the FCC's ownership rules.

Tribune, which owns FOX59, also said that it is filing a lawsuit against Sinclair, citing breach of contract.

"We're obviously disappointed", Tribune CEO Peter Kern said on a conference call Thursday morning.

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

Additional reporting from Newsy affiliate CNN.

Sinclair did not immediately comment on Thursday, but said last month 'at no time have we withheld information or misled the FCC in any manner whatsoever'.

Last month, Pai said the merger would need to be reviewed by a judge in an administrative hearing - a huge setback for a deal that was announced in May of 2017.

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The so-called "sidecar deals" unraveled the merger's chances of approval, Tribune said, and ultimately prompted its decision to back out and file a lawsuit.

Sinclair Broadcast Group Inc. wanted the Chicago-based company's 42 TV stations and had agreed to sell nearly two dozen of its own to score approval by the Federal Communications Commission. "The company believes these class action lawsuits are without merit and intends to vigorously defend against the allegations", Sinclair's earnings release said yesterday.

To stay under the national TV ownership cap, Sinclair had proposed shedding 23 stations, including 14 owned by Tribune and nine of its own.

"In light of (the FCC order), this transaction can not be completed within an acceptable time frame, if ever", Kern said. The owner of WGN-Ch.9 and dozens of other television stations, Tribune Media remains an acquisition target.

Like many media stories these days, this one also has a political angle: In recent years, Sinclair and the Smith family have shown favor to President Trump and backed conservative messages.

'This uncertainty and delay would be detrimental to our company and our shareholders'.

"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.

Leaving no doubt in anyone's mind whose tank they are in, Trump himself has endorsed Sinclair, calling it "far superior to CNN and even more Fake NBC".

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