Tribune Co. ends $3.9B takeover, sues KECI owner Sinclair Broadcasting
(Courthouse News) Returning the ring and making curtains of the dress, Tribune Media filed suit Thursday against Sinclair Broadcast Group over a $3.9 billion buyout offer that had alarmed regulators and legal experts.
Sinclair owns Missoula’s NBC affiliate, KECI-TV.
The acquisition by conservative-focused Sinclair would have created a massive broadcast group with access to more than 72 percent of all U.S. households. It hit a snag last month, however, when the chairman of the Federal Communications Commission expressed “serious concerns” about the stations Sinclair had agreed to divest to skirt antitrust concerns.
To protect itself from the FCC investigation, Tribune’s suit in Delaware Chancer Court accuses Sinclair of attempting to mislead the government. A copy of the complaint is not yet available, but a press release on Tribune’s website accuses Sinclair of having engaged in “unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission” in the regulatory review of the merger.
“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 timeframe, if ever,” Tribune CEO Peter Kern said in a statement, pointing to FCC Chairman Ajit Pai’s call for an administrative hearing to assess the veracity of some of the information provided to the commission by Sinclair.
“This uncertainty and delay would be detrimental to our company and our shareholders,” Kern continued. “Accordingly, we have exercised our right to terminate the merger agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”
The FCC accused Sinclair of engaging in “a potential element of misrepresentation or lack of candor” in its effort to secure government approval. It also raised concerns about business ties that likely lowered the purchase price of Tribune’s WGN-TV Chicago below market value, at $60 million, for a new entity controlled by the CEO of Atlantic Automotive Group.
Tribune has not yet announced whether it will move to sell off its stations in piecemeal fashion. If so, it is possible Sinclair will still absorb several stations. As part of Sinclair’s divestiture plan, Fox Television Stations had already proposed a deal with the company to acquire seven of Tribune’s Fox affiliate stations after the merger for $910 million.
Tribune’s suit asserted that Sinclair violated the terms of its contract, which called for Sinclair to make a good-faith effort to comply with 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 said in its lawsuit, according to the statement posted on its website.
Sinclair has not yet responded to a request for comment.