US broadcast group Tribune Media has terminated its planned US$3.9 billion (€3.4 billion) merger with Sinclair Broadcast Group and is filing a lawsuit against the broadcast outfit for breach of contract.
Tribune said that its lawsuit in the Delaware Chancery Court would seek compensation for losses incurred as a result of Sinclair’s breaches of the merger agreement between the pair that dates from last year.
Tribune said that Sinclair had failed to come good on commitments to sell local stations in a number of markets to secure regulatory approval. It alleged that, to maintain control over stations it was obliged to sell, Sinclair had “engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission” and had proposed “aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay”, leading the FCC to put the merger on indefinite hold while an administrative law judge determined whether the group had misled the regulator.
“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,” said Peter Kern, Tribune Media’s CEO.
“This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”
The move came just as the deadline for completing the deal expired. Earlier, Sinclair CEO Christopher Ripley had said that talks between the pair were still continuing.
“In regards to the acquisition of Tribune Media Company, we are working with them to analyse approaches to the regulatory process that are in the best interest of our companies, employees and shareholders,” said Ripley in a statement accompanying Sinclair’s Q2 results, which saw the broadcaster grow its revenues by 11.9% to US$730.1 million. Operating income was US$131.6 million, up from US$118.8 million.
Tribune meanwhile posted Q2 operating revenues of 4% to US$489.4 million an operating profit of US$98.1 million, up from US$12.7 million for the same period last year.
Sinclair, which is the largest operator of local television stations in the US, with a reach of about 40% of US homes, agreed to acquire rival Tribune in May last year.
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24th May 2020