Sinclair Agrees To Pay $3.9B For Tribune Media

Sinclair Broadcast Group is poised to become the nation’s most powerful local TV broadcaster with its announcement this morning of an agreement to buy Tribune Media for $3.9 billion in cash and stock, plus the assumption of $2.7 billion in debt.

Tribune opened up about 5% on the news.

The companies expect the deal to close by year end. If it does, then Sinclair will own, operate, or serve 233 television stations in 108 markets and be, by far, the biggest independent owner of Fox affiliates.

Tribune has 42 stations in 33 markets including 14 Fox affiliates, 12 with CW, six with CBS, three with AMC, and two NBC. It also owns cable’s WGN America, digital multicast network Antenna TV, and minority stakes in the TV Food Network and CareerBuilder.

The companies acknowledge that in order to secure FCC and antitrust approvals, Sinclair “may sell certain stations in markets where it currently owns stations. Such divestitures will be determined through the regulatory approval process.”

Sinclair appears to be counting on the Republican-controlled FCC to raise the cap on the number of households a single company can reach — currently at 39%. Tribune reaches 44% of the country and Sinclair has 38%. The numbers drop respectively to 27% and 23% with an FCC rule that just counts half of the households reached by UHF stations.

“This is a transformational acquisition for Sinclair that will open up a myriad of opportunities for the company,” Sinclair CEO Chris Ripley says. The combination will “create a leading nationwide media platform that includes our country’s largest markets” and “create substantial synergistic value through operating efficiencies, revenue streams, programming strategies and digital platforms.”

Tribune CEO Peter Kern noted that the company, which has been on the block for 15 months, will give his stockholders and employees “opportunity to participate in the long-term growth of the combined company.”

A Sinclair-Tribune combined company would have generated $4.07 billion in media revenues in 2015, and $4.60 billion in 2016.

Fox and Blackstone Group were also considering making a joint offer for Tribune.

Sinclair stations account for 16.9% of Fox’s reach, 14.0% of ABC’s, 9.4% of CBS’, and 5.7% of NBC’s. Tribune reaches 13.5% of Fox’s audience, 3.2% of CBS’, 1.3% of ABC’s, and 1.0% of NBC’s.

A deal that strengthens Sinclair could greatly expand its political clout.

Interviews the Baltimore-based group conducted with Donald Trump at its stations are believed to have helped him win some swing states. Sinclair stations air right-leaning commentaries by Boris Epshteyn, who joined this spring after a stint as a White House spokesman.

Craig Aaron, CEO of progressive media activist group Free Press, calls the Sinclair-Tribune deal “a scandal.”

“Sure looks like a quid pro quo: friendly coverage and full employment for ex-Trump mouthpieces in exchange for a green light to get as big as Sinclair wants,” he says. “I feel terrible for the local journalists who will be forced to set aside their news judgment to air Trump-administration talking points and reactionary commentaries from Sinclair’s headquarters. This deal would have been DOA in any other administration, but the Trump FCC isn’t just approving it; they’re practically arranging it.”