Tribune Media officially withdrew from a proposed $3.9 billion merger with Sinclair Broadcast Group on Thursday, announcing its intent to sue Sinclair for breach of contract.
The proposed merger, which would have allowed the Trump-friendly Sinclair to broadcast into 72 percent of American homes, has been on the rocks for a while. In July, Federal Communications Commission (FCC) Chairman Ajit Pai voted, along with other members of the FCC, to send the merger through a lengthy administrative process which was widely regarded as a deal-killer.
Sinclair revised the deal several times, but commissioners repeatedly raised concerns that the revisions essentially amounted to smoke and mirrors. This was especially true of the divestment Sinclair undertook in July, to comply with federal ownership caps. While the media behemoth agreed to sell two of the stations originally included in the merger, to ensure it stayed below those caps, officials said Sinclair had attempted to sell the stations to Cunningham Broadcasting, which is run by the estate of the Sinclair chief executive’s mother and maintains close ties to Sinclair.
“The record raises significant questions as to whether those proposed divestitures were in fact ‘sham’ transactions,” the FCC said in its hearing order. “The close relationship between Sinclair and Cunningham could explain how Cunningham was able to execute an agreement to purchase stations KDAF and KIAH at what appear to be below-market prices.”
Pai himself was also facing an investigation by the FCC’s inspector general over allegations he deliberately relaxed certain regulations to help facilitate Sinclair’s merger. The allegations stem from an April 2017 decision when the FCC reversed an Obama-era ruling which limited the number of stations any one company could own. Those regulations were further eased in October 2017, leading the FCC inspector general to launch an internal investigation into whether or not Pai had “improperly pushed for the rule changes and whether they had timed them to benefit Sinclair.”
Sinclair’s efforts to obfuscate the federal approval process have also opened the door for Tribune Media, which owns 42 TV stations as well as several newspapers including the Los Angeles Times and Chicago Tribune, to sue Sinclair for failing to uphold its contractual obligations.
“Sinclair’s entire course of conduct has been in blatant violation of the Merger Agreement,” Tribune Media said in a statement. “But for Sinclair’s actions, the transaction could have closed long ago.”
The Maryland-based Sinclair Broadcast Group is familiar with controversy after executives began forcing its news anchors across the country to air carefully scripted “must-run” segments, which routinely feature a mix of pro-Trump talking points. One of the more recent such segments — by former Trump staffer Boris Epshteyn — claimed that the national uproar over Trump’s border separation policy was “politically driven by liberals and the media.”