Sinclair Broadcast Group said it continues to pursue its $3.9 billion acquisition of Tribune Media despite a major regulatory setback and new lawsuits claiming employees jumped the gun on the deal before it entered its current limbo state.
The No. 1 local TV chain delivered the comments along with strong second-quarter financial results. It reported diluted earnings per share of 27 cents, a 37% decline from the same period a year ago but well ahead of Wall Street forecasts. Total revenue gained nearly 12% to $730.1 million.
“In regards to the acquisition of Tribune Media Co., we are working with them to analyze approaches to the regulatory process that are in the best interest of our companies, employees and shareholders,” CEO Chris Ripley said in the company’s earnings release.
Ripley and other executives discussed the results with Wall Street analysts in a conference call, declining to address specific Tribune questions while also asserting a healthy overall M&A appetite regardless of the Tribune outcome. Speculation has swirled that Tribune could walk away from the deal and find a new buyer. The deadline for completing the deal is technically today.
The merger, which would create a local TV behemoth reaching nearly two-thirds of U.S. households, hit the rocks earlier this summer. 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.
More recently, the company has also been targeted with three federal class-action lawsuits over alleged fixing of ad prices, with sales teams from Sinclair and Tribune accused of colluding before the merger got final approval. “The company believes these class action lawsuits are without merit and intends to vigorously defend against the allegations,” the earnings release said.
Ripley said the remainder of 2018 will “continue to be robust, underlined by increasing distribution revenues and strong political advertising spend.” The mid-term elections, he said, “are expected by many to have the most spending in U.S. history, with broadcast television a primary beneficiary.”