As the $3.9 billion Tribune Media acquisition they first proposed more than a year ago appeared set to expire at midnight, Sinclair Broadcast Group executives shrugged at questions from Wall Street analysts wondering how they plan to turn the page.
CEO Chris Ripley gamely answered a couple of Tribune-based queries during a conference call to discuss the company’s strong second-quarter results, asserting that the company’s M&A appetite has not changed. With the deadline for completing the deal just hours away, Sinclair said earlier this morning that talks between the companies are continuing.
Ripley and CFO Lucy Rutishauser declined to answer certain other Tribune questions, citing the pending talks. The call lasted only 35 minutes, notably shorter than those held in previous quarters.
“We’re always active,” Ripley said. “We continue to seek scale within the broadcast industry.” He later added, “Our priorities or our view of the world don’t change in terms of what happens with Tribune. We will continue to balance our M&A pipeline and our returns there with the returns that can be had by repurchasing our own stock.
“When clarity comes on the outcome for Tribune, then that evaluation will be made and weighed against other opportunities that are coming on the marketplace.”
A Tribune spokesman declined to comment to Deadline on the state of the deal. Last month, the company said it was reviewing all of its options when the transaction took a sharp left turn at the FCC.
One attractive asset on the block is the portfolio of regional sports networks that Disney will be divesting of as a condition of Department of Justice approval of its $71.3 billion acquisition of most of 21st Century Fox. Ripley said the RSNs are an appealing target in a sector adjacent to the company’s local broadcasting core, but a feasible one to go after given the company has bought non-station properties like the Tennis Channel. “They are fairly interesting,” he said of the RSNs. “They are a good fit with the broadcast footprint and operations. Of course, it all has to be for the right value.”
The Tribune merger, which would create a local TV behemoth reaching nearly two-thirds of U.S. households, hit the rocks earlier this summer after an initial span of months when it seemed a fait accompli. FCC Chairman Ajit Pai flagged “serious concerns” and led a unanimous vote to refer the merger review to an administrative law judge. Historically, few mergers have emerged intact from such a referral.
The commission objected to the so-called “sidecar” deals Sinclair had set up in order to divest of stations and comply with FCC limits on station ownership. Those divestitures would have left the stations in semi-related entities over which Sinclair would still exercise control, the FCC said, in violation of the rules.
Sinclair has attracted scrutiny for its aggressive methods, right-wing political slant and close ties with the administration of President Donald Trump. The Trump element has made the move by Pai, a Republican Trump appointee, all the more stunning. Most observers felt the de-regulatory sweep of the FCC under Pai would lead to speedy approval of the Sinclair-Tribune deal, putting the Baltimore-based station group in major markets such as New York, L.A. and Chicago.
As regulators put the deal under the microscope, Trump publicly lamented that a conservative voice had been squelched. He called it ““sad and unfair” that the deal had not been approved. Some conservative voices, including Trump confidant and NewsMax CEO Christopher Ruddy, have spoken out against its gargantuan scale.
Sinclair will not pay a breakup fee if the transaction does not close.
Rutishauser described the company’s balance sheet as the healthiest in the history of the company. Ripley said those resources benefit the company, which remains the No. 1 owner of local TV stations even without Tribune. “Our appetite to do future transactions has not changed based on the current status of the Tribune transaction,” he said. “So there really is no change there. We will continue to seek scale both within the broadcast industry and in adjacencies. Look, if a less regulated opportunity like an RSN makes sense from a business and a value perspective, that obviously is a benefit for anyone. Less regulated industries are generally easier to operate in.”