UPDATE: Tribune pulls out of TV mega-merger with Sinclair

UPDATE 2 — 8/9, 10:15 a.m. EDT: Following over a year’s worth of anticipation, Tribune has withdrawn from a $3.9 billion plan to merge with Sinclair after the FCC’s failure to approve the deal in July which would have put over 200 small, medium and large market TV stations under the umbrella of a single company.

In addition to pulling out from the proposed acquisition, Tribune has also filed a $1 billion lawsuit against Sinclair for damages, alleging Sinclair failed to uphold their end of the bargain by not complying with U.S. regulators’ request to divest in certain markets to gain approval for the merger.

 

UPDATE — 7/25, 10:58 a.m. EDT: President Trump jumped into the Sinclair-Tribune merger controversy late Tuesday, offering criticism for the FCC which signaled serious concern last week about the potential deal.

According to Politico, Sinclair plans to create a cable news channel which would target an audience similar to that of Fox News if the buy-out of Tribune Media is approved.

 

In a unanimous decision on Wednesday, the Federal Communications Commission (FCC) voted against Sinclair Broadcast Group’s proposed acquisition of Tribune Media Co., a move which casts doubt the media giant’s takeover bid will be finalized.

Following the commission’s vote, in a move which indicates the deal is heading for failure, the FCC adopted a Hearing Designation Order to refer the matter to an administrative law judge.

In a statement expressing “serious concerns” over a “deceptive” proposal to takeover of Tribune Media, FCC Chairman Ajit Pai said:

“Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction.  The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

Sinclair’s troubles revolve around its plan to divest 21 stations to earn approval of the merger, in which the Maryland-based media company would sell the stations, but retain an interest which would guarantee earning revenue from the divested entities.

“Sinclair had a huge opportunity to execute on a transformative M&A transaction. . . . (but) chose to push the boundaries relative to the existing regulatory framework instead of playing it safe with required station divestitures,” a Fitch Ratings analyst said.

A $3.9 billion plan initially proposed in May 2017, the bid to acquire Tribune Media included 42 television stations in 33 nationwide markets, predominantly in Chicago and New York City.

Sinclair is the largest owner of television stations in the country, with a majority stake in 170 stations nationwide.

 

[The Verge] [The Hill] [Politico] [Wall Street Journal] [Photo courtesy The Street]