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

Sergio Cunningham
August 9, 2018

Tribune filed the lawsuit against Sinclair, the largest US broadcast station owner, alleging material breach of contract over its failure to win over regulators 15 months after the merger was first announced.

Sinclair, which owns 192 stations, said in May 2017 that it planned to acquire Chicago-based Tribune's 42 TV stations in 33 markets.

The FCC voted last month to refer the proposed merger to an administrative law judge to review questions about Sinclair's candor, a move that analysts had then said would likely lead to the deal's collapse.

Last month, FCC Chairman Ajit Pai expressed "serious concerns" regarding this merger, which would have created one of the largest broadcasting companies in the country and further consolidated the power of Sinclair, which owns almost 200 local stations throughout the US.

Sinclair initially announced plans to buy the media conglomerate fifteen months ago. And the sales allegedly had strings attached that would allow Sinclair to retain significant control over the stations' operations and programming. Sinclair also refused to sell certain stations that would have helped the deal secure regulatory approval, Tribune claimed in a news release.

"From virtually the moment the Merger Agreement was signed, Sinclair repeatedly and willfully breached its contractual obligations in spectacular fashion", the suit says.

The breakup of the deal is a stinging defeat for Sinclair, owner of dozens of local television stations.

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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.

The FCC recently sent the deal to an administrative law judge for a closer look because of concerns that Sinclair misrepresented facts in its application in order to circumvent the FCC's ownership rules.

In a surprise move in July, however, Pai said he had "serious concerns" and suggested Sinclair was trying to hide anticompetitive practices in its proposed purchase and divestiture of certain stations.

The American Cable Association (ACA), which represents small- and medium-sized cable companies, also cheered Tribune's decision.

Sinclair did not immediately respond to requests for comment.

The announcement brings an end to a merger that was thought to have a staunch champion in FCC Chairman Ajit Pai, whose tenure had been marked by a deregulatory agenda that had cleared out restrictions against consolidation in the media industry.

If no divestitures were made, "the combined company would reach 72 percent of U.S. television households and would own and operate the largest number of broadcast television stations of any station group", the FCC notes.

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