Tribune Media withdraws from Sinclair merger, sues for $1 billion

09 August, 2018, 21:18 | Author: Cecil Buchanan
  • Tribune Media terminates merger agreement with Sinclair files lawsuit for breach of contract

Tribune filed the lawsuit against Sinclair, the largest USA broadcast station owner, alleging material breach of contract over its failure to win over regulators 15 months after the merger was first announced. The company already owned 173 stations in 81 markets.

"In light of (the FCC order), this transaction can not be completed within an acceptable time frame, if ever", Kern said.

NEW YORK, August 9, 2018 - Tribune Media Company (NYSE: TRCO) (the "Company") today announced that it has terminated its merger agreement (the "Merger Agreement") with Sinclair Broadcast Group, Inc.

The $3.9 billion buyout of Tribune Media by Sinclair collapsed Thursday, ending a bid to create a massive media juggernaut that could have rivaled the reach of Fox News.

Sinclair had proposed some revisions to its divesture plan last month, but those terms left Sinclair in control of stations under scrutiny, including in Chicago. The reason Tribune has filed suit is that Sinclair agreed to use "best reasonable efforts" to make the sale happen by pursuing the sell off of some of its own stations.

Pai´s statement raising questions about whether Sinclair would continue to control some of the stations it proposes to divest followed similar questions raised in separate filings by the American Civil Liberties Union and conservative news outlet Newsmax Media.

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Tribune seeks about $1 billion of lost premium to Tribune's stockholders and additional damages in an amount to be proven at trial, according to a copy of the lawsuit filed in Delaware.

Sinclair did not immediately respond to requests for comment.

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.

The two companies had until midnight Wednesday to call off their deal. It announced plans a year ago to merge with Chicago-based Tribune, a deal that would have given Sinclair access to 72 percent of American households. It also said the $60 million purchase price for Tribune's WGN-TV in Chicago "appeared to be significantly below market value". "Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable", said Tribune CEO Peter Kern in the release.

Ajit Pai, the Republican FCC chairman appointed by President Donald Trump, abruptly flagged "serious concerns" about the divestitures of stations by Sinclair and referred the case to an administrative law judge, effectively killing the deal.

Sinclair has defended the decision to have its anchors read from the same script across the country as a way to distinguish its news shows from unreliable stories on social media.

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