- Share this article on Facebook
- Share this article on Twitter
- Share this article on Email
- Show additional share options
- Share this article on Print
- Share this article on Comment
- Share this article on Whatsapp
- Share this article on Linkedin
- Share this article on Reddit
- Share this article on Pinit
- Share this article on Tumblr
Sinclair Broadcast Group had ambitions to become a national television force. Instead, the company’s $3.9 billion takeover of Tribune Media has fallen apart, and it is now facing a billion-dollar lawsuit that basically tells a story of stubbornness.
By acquiring most of Tribune’s 42 TV stations, national network WGN America and other assets, Sinclair seemed primed to become the biggest rival to Rupert Murdoch’s television empire. With a conservative viewpoint expressed in its local newscasts, Sinclair won backing from President Donald Trump (not that it ended up as mattering).
The deal between Sinclair and Tribune was on thin ice thanks to the decision by the Federal Communications Commission last month to throw review of the transaction to an administrative law judge. FCC chairman Ajit Pai expressed concern about how proposed station divestitures — which is needed to clear regulatory hurdles — would allow Sinclair to control those stations in practice. The FCC was unhappy with what it saw as misleading representations made by Sinclair about its “side-car” arrangements. According to a complaint filed on Thursday in Delaware Chancery Court, Pai also urged Sinclair to withdraw the merger applications in their entirety.
Today it became official that the $3.9 billion deal is off. Now comes the exploration of what went wrong.
According to Tribune, the 2017 merger agreement obligated Sinclair to use its reasonable best efforts to obtain regulatory clearance. Sinclair had an express obligation to divest stations to obtain approval, the complaint adds.
“To prevent Sinclair from engaging in protracted negotiations or in any other behavior that would delay the Merger’s closing, the Merger Agreement required Sinclair to agree to divestures to avoid even the threat of any proceeding or order relating to regulatory review,” states the complaint.
Tribune accuses Sinclair of breaching this obligation from virtually the moment the agreement was signed and takes issue with Sinclair’s “belligerent and unnecessarily protracted negotiations” with the regulators.
Although most have focused on the FCC’s review of Sinclair-Tribune, Tribune points to conversations between Sinclair and the Justice Department. That includes what happened after November 2017 when the DOJ allegedly told Sinclair that it would clear the merger if stations in 10 markets were divested.
“DOJ’s demand was neither unexpected nor draconian – it overlapped entirely with what Sinclair had already committed to do in the Merger Agreement,” states the complaint. “Yet Sinclair refused, deciding instead to antagonize DOJ officials, including by accusing the Assistant Attorney General of the Antitrust Division — the highest ranking official in that division — of ‘completely misunderstand[ing]’ the broadcast industry and being ‘more regulatory’ than any recent predecessor. In meetings with DOJ, Sinclair invited litigation over station divestitures, summarizing its position to DOJ in two words: ‘sue me.'”
Sign up for THR news straight to your inbox every day