Tribune Calls Off $3.9 Billion Sinclair Merger and Announces Lawsuit

Tribune Media has called off its proposed $3.9 billion merger with Sinclair Broadcast Group and announced that it will soon file a significant lawsuit against the conservative broadcasting giant for allegedly breaching their merger agreement. The merger had been promoted by President Donald Trump since Sinclair Broadcasting is one of his most prominent media supporters and has been known to force all of its television stations to broadcast the same company-prepared pro-Trump messages.

In the announcement made early Thursday morning, Tribune blamed Sinclair for the many roadblocks that the deal has faced at the Federal Communications Commission (FCC). Just last month, the FCC voted unanimously to make the merger subject to an administrative law proceeding, which is a very time-consuming process that was expected to sidetrack the deal.

“In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,” Tribune CEO Peter Kern said in a prepared public announcement.  

“This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable,” he added.

The news from Tribune Media brings to a conclusion the attempted merger of two major media companies that was widely attacked throughout the industry. It was, however, believed to have had a supporter  in Trump-appointed FCC Chairman Ajit Pai, who has been known for his deregulatory agenda, leading to fewer restrictions against consolidation in the media industry.

The proposed merger’s chances of being approved were lowered last month when Pai made the announcement that he had “serious concerns” about the merger. He then sent it before an administrative law judge for review, which only happens when deals are not going to be approved. A problem for the regulators at the FCC and the Justice Department was that there were several side deals that Sinclair wanted done to bring the newly merged entity into compliance with federal regulations concerning the number of local television stations that can be owned by one company.

The proposed side deals were shady in that they involved selling highly valuable stations to buyers with business ties to Sinclair for below-market prices, the FCC alleged. Plus these proposed “insider” sales also had strings attached that would give Sinclair significant control over the operations and programming of the stations it had supposedly sold. In other words, the side deals were scams designed to get regulatory approval but not to make any real changes to comply with the laws.

It was these bogus “sidecar deals” that Tribune said destroyed the merger’s chances of approval and led to its decision to back out of the deal and file the lawsuit announced today.

“In the Merger Agreement, Sinclair committed to use its reasonable best efforts to obtain regulatory approval as promptly as possible, including agreeing in advance to divest stations in certain markets as necessary or advisable for regulatory approval,” Tribune said.

“Instead, in an effort to maintain control over stations it was obligated to sell, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission (the “FCC”) over regulatory requirements, refused to sell stations in the markets as 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 derogation of Sinclair’s contractual obligations.”

The failure of this proposed merger was a defeat for Sinclair, but a victory for freedom of the press. A right-wing propaganda machine like Sinclair should not be allowed to control news access to 80% of the country. Hopefully they will be content with what they have and not try to subvert any more laws in their attempts to promote their pro-Trump agenda.