Tribune sues Sinclair for $1bn as US TV stations consolidation bid collapses
USA’s Tribune Media has filed a lawsuit against Sinclair Broadcast Group, the country’s largest TV station owner, for $1 billion in damages, after Sinclair’s proposed $3.9-billion takeover of Tribune collapsed in the face of opposition from regulators and Sinclair’s perceived failure to divest the stations required for the deal to win regulatory approval.
The termination of the deal follows concerns over whether it was in the public interest and criticism from the Federal Communication Commission, which said last month that Sinclair did not “fully disclose facts” about the planned sale of three stations.
In January, Rupert Murdoch’s 21st Century Fox was reported to be close to acquiring a group of Sinclair’s stations as part of a bid to control more stations in local sports markets.
The group of eight to 10 stations included those in Seattle and Denver, homes of the NFL’s Seahawks and Broncos respectively.
However, in its lawsuit, Tribune claimed: “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 FCC over regulatory requirements. 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.”
Tribune claimed that Sinclair rejected “clear paths to regulatory approval,” and instead “fought, threatened, insulted, and misled regulators in a misguided and ultimately unsuccessful attempt to retain control over stations that it was obligated to sell.”
But Sinclair denied the allegations, saying that “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.”
It added that, “as for Tribune's lawsuit, we fully complied with our obligations under the merger agreement and tirelessly worked to close this transaction.”
The takeover would have created a broadcast giant with more than 200 stations across the country, enabling Sinclair to expand its reach in the top 10 US markets.
Tribune is now thought likely to receive other takeover offers, with Fox, Nexstar Media Group and Cox Enterprises thought to be in the frame.
Amid a wave of industry consolidation, Peter Kern, Tribune’s chief executive, said yesterday that the company is “open to all opportunities,” noting that there is “tons of activity out there.”