Tribune calls off $3.9 billion Sinclair media deal

Posted at 7:35 AM, Aug 09, 2018
and last updated 2018-08-09 09:35:30-04

By Charles Riley and Hadas Gold, CNN Money

The Sinclair Broadcast Group acquisition of Tribune Media is dead.

Tribune said in a statement Thursday that it has terminated its merger agreement with Sinclair, scuttling a $3.9 billion deal that would have given the broadcasting group an even broader reach into American living rooms. It’s also suing Sinclair for breach of contract.

The breakup of the deal is a stinging defeat for Sinclair, owner of dozens of local television stations. Sinclair has been scrutinized for its ties to the Trump administration.

Tribune had been expected to walk away after the deal came under scrutiny from US regulators. The FCC in July referred the merger to an administrative judge hearing, often a death knell for these types of deals. The commissioners called into question whether some of Sinclair’s proposed divestments were a “sham” because they were being sold to people so closely aligned with Sinclair.

Wednesday was the first day Tribune was allowed to pull out of the deal, per the merger agreement. That’s when Tribune board voted the to walk away.

Not only is it pulling out of the deal, but Tribune said it will sue Sinclair, arguing Sinclair’s negotiations with the US Justice Department and FCC were “unnecessarily aggressive.” Sinclair also refused to sell certain stations that would have helped the deal secure regulatory approval, Tribune claimed in a news release.

“Our merger cannot be completed within an acceptable timeframe, if ever,” Tribune CEO Peter Kern said in a statement.

Tribune employees were notified that the deal was off in a lengthy early-morning memo from Kern that blasted Sinclair and said Tribune had done “everything it was supposed to do.”

Kern acknowledged that there would be “speculation” about who might buy Tribune, but urged employees to “shake off the cobwebs of deal distraction, ignore the outside noise, and continue delivering on our commitment to each other, to our customers, to our partners and to the communities we serve.”

Analysts expect Tribune to seek another buyer. A high ranking source inside Sinclair suggested to CNN one of those buyers could be Rupert Murdoch’s Fox. Disney will buy most of 21st Century Fox, but Murdoch will still control Fox’s broadcast, sports and news networks.

Sinclair did not immediately respond to requests for comment.

— CNN’s Brian Stelter contributed to this report

Editor’s Note: Tribune Media is a parent company of KSTU-Fox 13