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

Tribune Media terminates merger agreement with Sinclair files lawsuit for breach of contract

But the FCC had issues with the way Sinclair was approaching these sales and was concerned the company could buy the stations back after the merger was complete.

Those transactions involved selling highly valuable stations to buyers with business ties to Sinclair for below-market prices, the FCC alleged.

With the Tribune acquisition, it could expand into dozens of markets. Meanwhile, it has seen some employees leave.

Wednesday was the first day Tribune was allowed to pull out of the deal, per the merger agreement. He added, "Unfortunately, Sinclair chose to follow" a strategy that he said was only in Sinclair's own self-interest - and which damaged the deal. That would violate antitrust laws.

Sinclair did not immediately respond to requests for comment.

The $3.9 billion acquisition was announced in May after Sinclair won the rights to Tribune Media at auction, which would have given Sinclair ownership or control of television stations in 72 percent of USA markets, including majors like New York City, Chicago and Miami.

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The $3.9 billion deal would have given Sinclair control of more than 200 local television stations broadcasting to 72 percent of the United States population, and the announcement of the proposed merger in May 2017 raised concerns about Sinclair's market dominance. The FCC in July referred the merger to an administrative judge hearing, often a death knell for these types of deals. Sinclair would have stations in Philadelphia, Washington, DC, Virginia, Indianapolis, Seattle, Sacramento, Milwaukee, Kansas City, Des Moines, Denver, Dallas, Houston, New Orleans, Memphis, Miami, Greensboro, Richmond, Des Moines, San Diego, Salt Lake City, Oklahoma City, St. Louis and more.

The FCC voted last month to refer the proposed merger to an administrative law judge to review questions about Sinclair's candor, a move that analysts had then said would likely lead to the deal's collapse. "Further delay and uncertainly would be detrimental to our company, our business partners and our shareholders, and accordingly, our board chose to terminate the merger agreement with Sinclair".

Sinclair "repeatedly and willfully breached its contractual obligations in spectacular fashion", the lawsuit alleges, saying that government regulators laid out a "clear path" that Sinclair ignored. The company already owned 173 stations in 81 markets. Tribune also filed a lawsuit, accusing Sinclair with breach of contract.

Tribune Media would be on the hook for a $135 million breakup fee, according to the agreement reached previous year. A copy of the lawsuit will be posted on the Tribune Media website, www.tribunemedia.com, as soon as it has been made publicly available by the Court. Here, the WGN Radio sign appears on the side of Tribune Tower in downtown Chicago.

"A long close poses real challenges, whether a company actually is acquired or not", Rouse said.

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