Published: Fri, August 10, 2018
Arts&Culture | By Matthew Castillo

Tribune terminates merger agreement with Sinclair, files suit for breach of contract

Tribune terminates merger agreement with Sinclair, files suit for breach of contract

Sinclair already own 39% of the TV stations in the U.S., and this would have raised that to 42%.

Tribune Media Company has terminated its merger agreement with Sinclair Broadcast Group, and has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract.

Sinclair owns or operates 173 broadcast TV stations in 81 markets, while Tribune has 42 stations in 33 markets.

Pai suddenly announced last month that he had "serious concerns" about the deal because Sinclair's divesture plan would still leave it effectively in control of TV stations in markets where its ownership exceeded FCC limitations, including in Chicago.

'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, ' Tribune said.

Tribune filed the lawsuit against Sinclair, the largest US broadcast station owner, alleging material breach of contract over its failure to win over regulators 15 months after the merger was first announced.

"So sad and unfair that the FCC wouldn't approve the Sinclair Broadcast merger with Tribune", Trump tweeted.

Sinclair did not respond to a request for comment Thursday morning.

Tribune "warned Sinclair repeatedly over many months" that its refusal to comply with required station divestitures was a breach of contract, according to the lawsuit, which seeks to recover at least $1 billion in damages.

Sinclair also has become a significant outlet for conservative perspectives.

Wednesday was the first day Tribune was allowed to pull out of the deal, per the merger agreement. Sinclair has been scrutinized for its ties to the Trump administration.

The company is "open to all opportunities" in terms of industry consolidation or remaining independent, Tribune Media Chief Executive Officer Peter Kern told investors on a call on Thursday.

"We think that it is likely that another suitor will emerge for Tribune in the near-term", Kenneth Duffel, an analyst with KDP Investment Advisors, said in a note.

The deal was worth $3.9 billion for Tribune Media and would have added more than 40 stations including KTLA in Los Angeles, WPIX in NY and WGN-TV in Chicago to Sinclairs list of local affiliates.

"The lawsuit described in Tribune's public filings today is entirely without merit, and we intend to defend against it vigorously". By one estimate, the combined company would have owned stations in almost 3 out of 4 USA households, controlling an enormous amount of the content Americans see on local stations.

With the Tribune merger dead for good, Sinclair will look for other ways to acquire new stations.

Sinclair has defended the decision to have its anchors read from the same script across the country as a way to distinguish its news shows from unreliable stories on social media.

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