Tribune Terminates the Long-Pending $3.9 Billion Merger with Sinclair

By A.J. Katz Comment

After 15 months of back-and-forth, the long-pending $3.9 billion agreement for Tribune Media to merge with Sinclair Broadcast Group has been terminated. The company also added that it would be suing Sinclair “in breach of contract.”

Tribune made the announcement this morning that it was pulling out of the agreement in the face of opposition from the Federal Communications Commission, which included questions about whether Sinclair chairman David Smith was trying to mislead the government with provisions to the constantly-changing station divestiture plan.

Sinclair needed to divest stations in order to meet the national cap on audience reach for any single broadcast company.

“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 time frame, if ever,” said Tribune CEO Peter Kern, who was named Tribune CEO two months before the agreement was struck.

The Sinclair-Tribune deal was originally struck in May 2017 and would have given Sinclair—already the largest owner of local stations in the country—an additional 42 Tribune stations, and consequently ownership of 233 local TV stations in 108 markets with access to more than 70 percent of U.S. TV-owning households.

The termination of the merger isn’t a surprise if one takes into account recent comments made by the Trump-appointed FCC chairman Ajit Pai.

In a July statement, he expressed “serious concerns” about Sinclair’s plan to divest certain local stations to companies with which it has ties, specifically ties to the Sinclair chairman.

“Based on a thorough review of the record, I have serious concerns about the Sinclair-Tribune transaction,” Pai said. “The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

The irony of it all is that Sinclair was seemingly empowered to pursue the merger with Tribune in the first place because Trump’s FCC made the decision to roll back longtime broadcast TV station ownership rules last year.

Sinclair features a conservative-leaning news operation, which has been criticized in the past for using its TV stations to deliver political messages, often targeting Democrats.

Pai’s “serious concerns” statement from last month angered President Trump. In July, the president remarked in a tweet: “So sad and unfair that the FCC wouldn’t approve the Sinclair Broadcast merger with Tribune. This would have been a great and much needed Conservative voice for and of the People. Liberal Fake News NBC and Comcast gets approved, much bigger, but not Sinclair. Disgraceful!”

This story does have national television news implications as well.

There was brief speculation in 2017 that Sinclair would try to launch its a national cable news platform. Sinclair CEO Chris Ripley struck down those rumors last July in Variety, saying “After we acquired Allbritton [Communications] in 2014, we looked hard at launching a national cable news channel, but we decided the world didn’t need another cable news platform…Our strength is local news. The market for national cable news is very well served.”

Politico reported in spring 2018 that Sinclair was intrigued by the idea of a few hours of prime time opinion programming to challenge Fox News Channel. But that would have been a tough sledding, to put it mildly. Plus, there are already national media challengers from the right, including Newsmax TV and One America News.

Ripley also said that former Fox Newser Bill O’Reilly approached him about a potential gig at the Maryland-based media company after his departure from Fox News.

“We get approached by people all the time, which is probably where these reports were coming from,” said Ripley. “He did approach us. We do not have any interest in hiring him.”

The company already employs former Trump administration official and conservative firebrand Boris Epshtyn, whose op-ed segments are “must runs” on Sinclair stations.

Former CBS News correspondent Sharyl Attkisson hosts a national Sunday morning news program to air on Sinclair’s local television stations. The show, Full Measure with Sharyl Attkisson, launched in 2015, is based in Washington, and is considered “a blend of investigative and political journalism, with a focus on accountability.”

Update: Newsmax Media CEO Chris Ruddy sent out the following statement in regard to this morning’s announcement:

 

The decision by Tribune not renew its merger transaction with Sinclair ends a merger that posed serious risks for diverse and balanced news in America’s

heartland.

When Newsmax began its opposition to this merger, we were told it was virtually “guaranteed” and could not be stopped.

I like taking on hopeless causes, especially when I believe the facts and good sense argue for such a cause.

Tribune’s statement today withdrawing from the merger confirms what Newsmax and others have been saying: Sinclair had failed to respect the regulatory review process and the rule of law, as it relates to market concentration and media ownership.

Opposition to this merger brought together members of both parties in Congress, as well as groups and individuals across the political spectrum.

The FCC clearly listened to their concerns. Chairman Ajit Pai and the Commission demonstrated their impartiality, independence and integrity by effectively rejecting the deal when it sent to for administrative review. They should be commended.

To avoid another potentially contentious merger transaction involving other companies in the future, we urge the Commission to complete its review of the network ownership limitation and set a new  standard, one that allows broadcasters to compete against transformational media while protecting the concepts of localism, diversity and competition, especially as it relates to local news.

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