Tribune Media Spikes Merger Deal With Sinclair, And Sues Its Former Suitor

Tribune Media terminates deal to be bought by Sinclair

"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 can not be completed within an acceptable timeframe, if ever", Peter Kern, Tribune Media's chief executive officer, said in the statement.

Separately, on Tuesday, Democratic members of Congress asked the FCC to investigate reports that "Sinclair Broadcasting illegally exercised control over the advertising activities of Tribune Media Company".

Sinclair, which owns 192 stations, said in May 2017 that it planned to acquire Chicago-based Tribune´s 42 TV stations in 33 markets in a deal that would significantly expand its reach. Sinclair also refused to sell certain stations that would have helped the deal secure regulatory approval, Tribune claims.

Tribune said it will sue Sinclair for breach of contract, arguing Sinclair's negotiations with the US Justice Department and FCC were "unnecessarily aggressive". By one estimate, the combined company would have owned stations in almost 3 out of 4 US households, controlling an enormous amount of the content Americans see on local stations.

Tribune said in the lawsuit that the merger agreement included a clause that when seeking to divest stations, Sinclair would sell in a manner that would avoid "even the threat" of any regulatory review.

The complaint seeks $1 billion from Sinclair to cover the "lost premium to Tribune's stockholders", plus "additional damages in an amount to be proven at trial".

The so-called "sidecar deals" unraveled the merger's chances of approval, Tribune said, and ultimately prompted its decision to back out and file a lawsuit. It also said the $60 million purchase price for Tribune's WGN-TV in Chicago "appeared to be significantly below market value".

Ajit Pai, the Republican FCC chairman appointed by President Donald Trump, abruptly flagged "serious concerns" about the divestitures of stations by Sinclair and referred the case to an administrative law judge, effectively killing the deal.

'So sad and unfair that the FCC wouldn't approve the Sinclair Broadcast merger with Tribune.

The FCC concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC's ownership rules and, accordingly, put the merger on indefinite hold while an administrative law judge determines whether Sinclair misled the FCC or acted with a lack of candor.

Sinclair did not immediately respond to requests for comment.

It's already been more than a year after the merger was announced; the two companies had previously said they would close the deal by the end of 2017.

The FCC's concerns followed similar questions raised in separate filings by the American Civil Liberties Union and conservative news outlet Newsmax Media.

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