The deal between two station groups that’s not happening because its against FCC rules right now, already has a dark horse candidate looking to break it up.
Bloomberg reports “people familiar with the situation” say 21st Century Fox, Inc. is looking for a way to “help thwart” a potential deal between Tribune and Sinclair. The motivation, according to Bloomberg, is that the potential merger would give Sinclair control of 28 percent of Fox affiliates in the U.S., giving the Maryland-based company more leverage when negotiating with Fox on splitting fees from cable providers.
“Fox holds some sway over Tribune’s destiny because it has to consent to the transfer of the company’s affiliate agreements to a new owner in the event of a takeover, two of the people said,” reports Bloomberg.
The deal won’t happen unless the FCC changes ownership rules. Right now a station group can only reach 39 percent of the country with its owned stations. Sinclair owns 173 stations in 81 markets, putting it at 38 percent. Tribune has 42 owned or operated stations and is at 44 percent.
But people familiar with the situation say Fox has been approached by “several parties which are interested in acquiring Tribune directly or as part of a consortium, said the people, who asked not to be identified because the talks are private. One of the parties that has talked with Fox is activist investor Starboard Value LP, which owned a 4.4 percent stake in Tribune as of March 15.” From Bloomberg:
While Sinclair recently approached Tribune about a possible merger, the companies aren’t close to a deal, other people familiar with the matter said. Nexstar Media Group Inc. is also weighing a bid, although it hasn’t hired a financial adviser yet, the people said. Nexstar has a history of laying in wait for a potential deal, striking an agreement to acquire Media General Inc. in 2015 only after Media General had announced plans to merge with Meredith Corp.
While some of the parties eyeing Tribune are interested in teaming up with Fox for a bid, Fox doesn’t want to acquire the broadcaster, the people said. Murdoch’s company may ultimately decide not to intervene at all, the people said.