The Sinclair & Tribune Merger is Now Dead

Lawrence Kim
August 9, 2018

In an announcement early Thursday morning, Tribune blamed Sinclair for the regulatory roadblocks that the deal has encountered at the Federal Communications Commission (FCC).

Sinclair already has 173 stations around the country, including KENV in Salt Lake City, KOMO in Seattle and WKRC in Cincinnati.

"In light of (the FCC order), this transaction can not be completed within an acceptable time frame, if ever", Kern said. A sticking point for regulators at the FCC and the Justice Department was a series of side deals that Sinclair had proposed in order to bring the combined company into compliance with regulations on the number of local TV stations a company could own.

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

The FCC said Sinclair did not "fully disclose facts" about the planned sale of three stations, including pre-existing business relationships between the company and prospective buyers.

To attempt to satisfy the FCC, Sinclair had said last month it would not divest WGN and would seek to put the two Texas stations into a divestiture trust to be sold and operated by an independent trustee.

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

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 did not immediately respond to requests for comment. Here, the WGN Radio sign appears on the side of Tribune Tower in downtown Chicago. In the case of Sinclair-Tribune, there is no such fee attached to the merger agreement.

Pai suddenly announced last month that he had "serious concerns" about the deal because Sinclair's divesture plan would still leave it effectively in control of TV stations in markets where its ownership exceeded FCC limitations, including in Chicago. Complicating matters is that Pai is under investigation for relaxing FCC rules to allow groups like Sinclair to add more stations.

The company is "open to all opportunities" in terms of industry consolidation or remaining independent, Tribune Media Chief Executive Officer Peter Kern told investors on a call on Thursday. Sinclair defended the script as a way to distinguish its news shows from unreliable stories on social media.

Sinclair is the nation's largest local broadcaster, reaching about 4 in 10 USA households through TV stations.

The FCC's concerns followed similar questions raised in separate filings by the American Civil Liberties Union and conservative news outlet Newsmax Media.

Other reports by Click Lancashire

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