Tribune Media-Sinclair Broadcasting Merger Off
The long running saga of a proposed Tribune Media and Sinclair Broadcasting merger seems to have finally been brought to a close, with Tribune not only killing the deal, but also filing lawsuit against Sinclair for “breach of contract” in an effort to mitigate a $135 million breakup fee.
Tribune cited Sinclair’s “unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission” in the regulatory review of the merger as the reason for the suit, filed Thursday in Delaware Chancery Court.
“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 cannot be completed within an acceptable timeframe, if ever,” said Peter Kern, Tribune Media CEO. “This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”
The $3.9 billion transaction, set in May 2017, would have combined two of the country’s largest broadcasters into a giant with more than 200 stations. Public interest groups lined up against the merger and Democrats contended that Sinclair was trying to infuse local stations with a conservative bent.
The decision to abandon the merger immediately raises the prospect of other suitors for Tribune Media. Industry sources speculate that the company may wind up selling off its assets in piecemeal fashion. Fox Television Stations had already cut a deal with Sinclair to acquire 7 of Tribune’s Fox affiliate stations for $910 million as part of its divestiture plan.
The deal-breaker on the merger came last month, when FCC chairman Ajit Pai announced that he had “serious concerns” about the transaction. The commissioners voted unanimously to send the merger to an administrative law judge for a hearing, a prospect that likely would add months or a year or longer to the review.
The killing of the merger comes two weeks after President Trump waded into the issue on Twitter, going against his own FCC to criticize the scrutiny by government over the proposed merger.
“So sad and unfair that the FCC wouldn’t approve the Sinclair Broadcast merger with Tribune,” Trump tweeted on Tuesday. “This would have been a great and much needed Conservative voice for and of the People. Liberal Fake News NBC and Comcast gets approved, much bigger, but not Sinclair. Disgraceful!”
Trump’s tweet puts FCC chair Ajit Pai, a Republican appointed by Trump, in the awkward position of having to defend the commission and assert its position as an independent regulatory agency that is not directly accountable to the president or other elected officials. Democrat commissioner Jessica Rosenworcel replied to Trump’s tweet on Tuesday with one word: “Disagree.”
At a House Energy and Commerce subcommittee hearing on Wednesday afternoon, Pai would not directly say whether he agreed or disagreed with Trump’s tweet when pressed by Rep. Frank Pallone (D-N.J.). Pai would only say “I stand by our decision” to send the transaction to a hearing last week after expressing concerns about Sinclair’s bid for Tribune Media.
“Trump’s tweet actually hurts us — because of the conservative line,” one staffer said.
Other Sinclair journalists seconded this point, saying colleagues were unhappy with Trump’s portrayal of the company as “conservative.” While stations have been forced to air pro-Trump commentaries and stories, most journalists at local stations want to be recognized for their straight-forward, nonpartisan work. They don’t want to be labeled by the president or anyone else.