Tribune Media kills $3.9B merger with Sinclair after FCC's 'serious concerns'

Sinclair Broadcast Group’s headquaters in Hunt Valley Md

Sinclair Broadcast Group’s headquaters in Hunt Valley Md

"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 can not be completed within an acceptable timeframe, if ever", Tribune CEO Peter Kern said in a statement.

The company was admonished by media watchdogs in April after dozens of Sinclair news anchors read an identical script expressing concern about "one-sided news stories plaguing the country".

Tribune withdrew from its $3.9 billion buyout by Sinclair, ending a bid to create a massive media juggernaut that could have rivaled the reach of Fox News. And the sales allegedly had strings attached that would allow Sinclair to retain significant control over the stations' operations and programming.

In the merger agreement, Sinclair committed to use its reasonable best efforts to obtain regulatory approval as promptly as possible, including agreeing in advance to divest stations in certain markets as necessary or advisable for regulatory approval. Tribune is seeking an amount "including but not limited to approximately $1 billion of lost premium to Tribune's stockholders and additional damages in an amount to be proven at trial".

In a surprise move in July, however, Pai said he had "serious concerns" and suggested Sinclair was trying to hide anticompetitive practices in its proposed purchase and divestiture of certain stations.

Sinclair, a Maryland-based company which is the largest owner of local news stations in the USA, is notorious for its right-wing, pro-Trump slant, and its unusual system of distributing slanted "must-run" content to its local stations to work into their broadcasts.

Sinclair did not immediately respond to requests for comment.

"We've done everything we could to assist Sinclair in getting through the regulatory process, and it's been a huge undertaking for our company to manage through this prolonged exercise, while also keeping our business running strong", Tribune Media CEO Peter Kern said during an earnings call Thursday morning.

Advocacy group Free Press said in an FCC filing in August 2017 that Sinclair forces its stations to 'air pro-Trump propaganda and then seeks favors from the Trump administration'. It also said the $60 million purchase price for Tribune's WGN-TV in Chicago "appeared to be significantly below market value".

The backstory: The deal was thought to be a sure thing, but the FCC threw a wrench into it after Chairman Ajit Pai, who is favorable to industry consolidation, raised questions about the validity of some of the deal terms provided to the commission by Sinclair. It could have had a new show on WGN America or had an existing show moved there.

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