Sinclair CEO Chris Ripley said Wednesday that Sinclair was working with Tribune to save the merger. Subsequently, the FCC voted to subject Sinclair's divesture plan to a hearing before an administrative law judge, further delaying completion of the transaction.
"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 can not be completed within an acceptable timeframe, if ever", said Tribune Media CEO Peter Kern, in a statement. "Millions of people spoke out against this deal, and that public pressure was instrumental in keeping the spotlight on Sinclair".
Tribune, which is on the hook for a $135million breakup fee, filed a lawsuit against Sinclair, the largest United States broadcast station owner, alleging material breach of contract 15 months after the merger was first announced.
Sinclair operates 192 stations in 89 US markets.
The $3.9 billion buyout of Tribune Media by Sinclair collapsed Thursday, ending a bid to create a massive media juggernaut that could have rivaled the reach of Fox News.
Sinclair Broadcast Group wanted the Chicago company's 42 TV stations and had initially agreed to dump nearly two dozen of its own to score approval by the FCC. The company already owned 173 stations in 81 markets. Tribune claims Sinclair used "unnecessarily aggressive and protracted negotiations" with the Department of Justice and Federal Communications Commission over regulatory requirements and refused to sell the stations it needed to.
The Sinclair Broadcast Group was its roots in the early 1970s, when Julian Sinclair Smith operated an FM radio station and a TV station in Baltimore.
Ted Rouse, a Chicago-based partner with Bain & Company specializing in mergers and acquisitions, said it may be hard for Tribune Media to return to business as usual after 15 months in limbo.
Analysts expect Tribune to seek another buyer.
A dozen Senate Democrats said in April Sinclair was deliberately distorting news coverage by forcing local stations to read scripts that criticized what it described as "the troubling trend of irresponsible, one-sided news stories plaguing our country".
The FCC "concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC's ownership rules and, accordingly, put the merger on indefinite hold while an administrative law judge determines whether Sinclair misled the FCC or acted with a lack of candor", Tribune's statement continued. And the sales allegedly had strings attached that would allow Sinclair to retain significant control over the stations' operations and programming.
In a surprise move in July, however, Pai said he had "serious concerns" and suggested Sinclair was trying to hide anticompetitive practices in its proposed purchase and divestiture of certain stations. It could have had a new show on WGN America or had an existing show moved there.
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