Tribune Media Terminates Merger With Sinclair Broadcast Group, Files Lawsuit

Nick Givas | Media And Politics Reporter

Tribune Media Company killed its merger with Sinclair Broadcast Group on Thursday and filed a lawsuit against the media conglomerate, claiming breach of contract.

Tribune is seeking financial compensation for losses it claims it suffered as a result of Sinclair’s breach of the merger agreement. (RELATED: Sinclair Broadcasting Group Pushing New Cable Platform To Compete With Streaming Services)

Tribune is accusing Sinclair of using questionable negotiating tactics when it was talking to the Department of Justice and the Federal Communications Commission over regulatory requirements, according to a statement obtained by The Daily Caller News Foundation. It also said Sinclair wouldn’t sell certain media stations to assure the deal’s approval.

The lawsuit seeks compensation for all losses incurred as a result of Sinclair’s material breaches of the Merger Agreement.

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. 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.

Ultimately, 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. As elaborated in the complaint we filed earlier today, Sinclair’s entire course of conduct has been in blatant violation of the Merger Agreement and, but for Sinclair’s actions, the transaction could have closed long ago.

The FCC states Sinclair might have also left out vital facts of its business dealings to get around specific ownership rules and said its actions have put the deal on an indefinite hiatus.

“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.”

ThDCNF reached out to Sinclair Broadcast Group for comment and received a statement about the merger. The company is denying Tribune’s accusations about misleading the FCC and said Tribune’s lawsuit is “entirely without merit.”
“We are extremely disappointed that after 15 months of trying to close the Tribune transaction we are instead announcing its termination,” commented Chris Ripley, President & Chief Executive Officer. “We unequivocally stand by our position that we did not mislead the FCC with respect to the transaction or act in any way other than with complete candor and transparency. Tribune, however, felt the FCC’s recent designation of the deal for a hearing in front of an Administrative Law Judge would have been a potentially long, costly and burdensome process and, therefore, pursuing the transaction was not in the best interest of both company’s employees and shareholders.
As for Tribune’s lawsuit, we fully complied with our obligations under the merger agreement and tirelessly worked to close this transaction. The lawsuit described in Tribune’s public filings today is entirely without merit and we intend to defend against it vigorously. “Nonetheless, we wish to thank both our and Tribune’s employees and our many advisers who have committed a tremendous amount of time and effort over the past 15 months towards the merger. It is unfortunate that those efforts have not been realized. The combined company would have benefited the entire broadcast industry and the public through the advancement of ATSC 3.0, increased local news, enhanced programming, and ensured longevity for local broadcasters.”
TheDCNF reached out to Tribune for further comment but was referred back to its initial statement.
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