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Aug 9, 2018

Tribune Media Calls Off Deal With Sinclair I Business I Dealbook I NYT

Ajit Pai, the chairman of the Federal Communications Commission, has said he had “serious concerns” about a merger of Tribune Media and The Sinclair Broadcasting Group.CreditTom Brenner/The New York Times
Tribune Media ended its deal with Sinclair on Thursday, and said that it was suing the broadcast company for breach of contract.
The Sinclair Broadcast Group, already the largest local television operator in the United States, agreed last year to buy Tribune Media for $3.9 billion in a deal that would have created a conservative broadcasting behemoth to rival Fox News. But the Federal Communications Commission had questioned whether Sinclair had been sufficiently transparent with regulators and whether it would be in the public interest.
In a statement on Thursday announcing its decision, Tribune said Sinclair had not made good on its commitment to use its best efforts to obtain regulatory approval as quickly as possible by selling off television stations and other assets. Tribune said Sinclair had instead tried to maintain control and engaged in “unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission.”
“The uncertainty and delay would be detrimental to our company and our shareholders,” Peter Kern, Tribune’s chief executive, said in a statement that came with its second quarter earnings.
The deal had the potential to give Sinclair control over broadcasters with access to 70 percent of households in the United States, including in major markets like Chicago, Los Angeles and New York. Consumer and media groups raised alarm over such a high degree of consolidation in a single broadcast group.
So the company proposed selling 23 television stations after the deal was completed, but even after getting rid of them, several of those stations would still effectively have been within its operational control. The F.C.C. said that raised questions about “whether those proposed divestitures were in fact ‘sham’ transactions.”
The merger agreement allowed for either side to walk away if the deal did not close by Aug. 8.
Tribune said in its statement that it was seeking compensation for all losses incurred from what it called Sinclair’s breach of the agreement.
Follow Amie Tsang on Twitter: @amietsang.

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