Published: Fri, August 10, 2018
Life&Culture | By Sue Mclaughlin

Tribune terminates merger agreement with Sinclair, files suit for breach of contract

Tribune terminates merger agreement with Sinclair, files suit for breach of contract

Tribune Media said Thursday that it would withdraw from its proposed merger with Sinclair Broadcast Group, while announcing a $1 billion lawsuit against Sinclair over its failed negotiations with federal regulators over the deal.

But it was effectively stopped last month when the FCC Chairman Ajit Pai expressed "serious concerns" about the deal.

The FCC reportedly concluded that Sinclair may have misrepresented or omitted some facts in its applications in an attempt to get around the FCC's ownership rules. "Accordingly, we have exercised our right to terminate the merger agreement, and, by way of our lawsuit, intend to hold Sinclair accountable", he said.

"So sad and unfair that the FCC wouldn't approve the Sinclair Broadcast merger with Tribune". But the FCC had issues with the way Sinclair was approaching these sales and was concerned the company could buy the stations back after the merger was complete.

Additional reporting from Newsy affiliate CNN.

Reporters at stations owned by Sinclair - which include almost 200 local affiliate news channels across the country branded as ABC, CBS, NBC, Fox, and more - have been forced to run segments that attack Democratic politicians, discredit the FBI's investigation of Russian Federation, call other media outlets "false news", and even run a regular commentary show by a former Trump adviser. The FCC moved to refer parts of the deal for review by an administrative law judge, effectively leaving it on life support.

SINCLAIR President/CEO CHRIS RIPLEY said, "It is unfortunate that TRIBUNE MEDIA COMPANY terminated our Merger Agreement".

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

"We think that it is likely that another suitor will emerge for Tribune in the near-term", Kenneth Duffel, an analyst with KDP Investment Advisors, said in a note. The commission objected to the so-called "sidecar" deals Sinclair had set up in order to divest of stations and comply with FCC limits on station ownership. The company already owned 173 stations in 81 markets.

With the Tribune acquisition, it could expand into dozens of markets.

Advocacy group Free Press said in an FCC filing in August 2017 that Sinclair forces its TV stations to "air pro-Trump propaganda and then seeks favors from the Trump administration".

'This uncertainty and delay would be detrimental to our company and our shareholders'. "Instead, Sinclair fought, threatened, insulted, and misled regulators in a misguided and ultimately unsuccessful attempt to retain control over stations that it was obligated to sell". The transaction would have left Sinclair with more than 200 stations.

The Sinclair Broadcast Group was its roots in the early 1970s, when Julian Sinclair Smith operated an FM radio station and a TV station in Baltimore.

Sinclair also has become a significant outlet for conservative perspectives.

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