Sinclair Broadcast Group’s $3.9bn (€3.6bn) deal to acquire fellow US media group Tribune Media Company has been scuppered after Federal Communications Commission (FCC) chairman Ajit Pai expressed “serious concerns” about the agreement.
After Pai said the transaction would undergo a lengthy administrative process, Tribune said it would sue Sinclair for $1bn due to what it claimed was the latter’s “belligerent and unnecessarily protracted negotiations” with regulators.
Tribune’s legal action was filed in the Delaware Chancery Court.
“From virtually the moment the merger agreement was signed, Sinclair repeatedly and wilfully breached its contractual obligations in spectacular fashion,” the lawsuit stated. “In an effort to maintain control over stations it was obligated to sell if advisable to obtain regulatory clearance, Sinclair engaged in belligerent and unnecessarily protracted negotiations with the DOJ (Department of Justice) and the FCC over regulatory requirements, refused to sell stations in the 10 specified markets required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay – all in the service of Sinclair’s self-interest and in derogation of its contractual obligations.”
Sinclair responded by calling the lawsuit “meritless”.
In May 2017, the two parties entered into a definitive agreement under which Sinclair would acquire 100 per cent of the issued and outstanding shares of Tribune for $43.50 per share, for an aggregate purchase price of approximately $3.9bn, plus the assumption of approximately $2.7bn in net debt.
Sinclair would have seized control of New York’s WPIX, which broadcasts coverage of New York Yankees and Mets Major League Baseball games, as well as KTLA in Los Angeles, which shows 20 LA Dodgers MLB games per season, and WGN in Chicago which offers coverage of the local baseball, basketball and ice hockey franchises.
Sinclair also co-operates OTT service Stadium and has agreements to show Conference USA, Mountain West, Patriot League, Southern Conference and West Coast Conference games.