Tribune Media files suit, terminates Sinclair tie-up deal

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Sinclair, a Maryland-based company which is the largest owner of local news stations in the USA, is notorious for its right-wing, pro-Trump slant, and its unusual system of distributing slanted "must-run" content to its local stations to work into their broadcasts.

Tribune Media has backed out of its proposed $3.9 billion merger with Sinclair Broadcast Group and said it will be filing a lawsuit against the broadcasting giant for allegedly breaching their merger agreement.

Sinclair Broadcast Group Inc. wanted the Chicago company's 42 TV stations and had agreed to dump nearly two dozen of its own to score approval by the Federal Communications Commission.

The media merger hit the rocks on July 16, when Federal Communications Commission Chairman Ajit Pai said he had "serious concerns" about the merger because Sinclair's plan to divest some stations might not satisfy federal laws.

Tribune said it will sue Sinclair for breach of contract, arguing Sinclair's negotiations with the US Justice Department and FCC were "unnecessarily aggressive". On Thursday, Kern said that any further delays would hurt his company - so the Tribune board made a decision to spike the deal.

Sinclair wanted to purchase Tribune Media's 42 stations in 33 markets, but there was a problem.

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Public Knowledge, an advocacy group that has been critical of the FCC under Pai, has been against a tie up between Sinclair and Tribune from the start.

The $1 billion lawsuit, filed in Delaware Thursday, said Sinclair knew it was taking a substantial risk by concealing from the FCC information about its relationships with certain buyers, putting undue pressure on the regulatory process and putting the merger at risk.

Sinclair has become a significant outlet for conservative perspectives.

Ted Rouse, a Chicago-based partner with Bain & Company specializing in mergers and acquisitions, said it may be hard for Tribune Media to return to business as usual after 15 months in limbo. The FCC declined to comment on Thursday.

In an announcement early Thursday morning, Tribune blamed Sinclair for the regulatory roadblocks that the deal has encountered at the Federal Communications Commission (FCC). 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. "Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable".

A dozen Senate Democrats said in April Sinclair was deliberately distorting news coverage by forcing local stations to read scripts that criticized what it described as "the troubling trend of irresponsible, one-sided news stories plaguing our country".

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