Sinclair Countersues Tribune Media Over Failed Local TV Merger

Sinclair Broadcast Group; Tribune Media

Sinclair Broadcast Group has filed a countersuit against Tribune Media in Delaware Chancery Court, accusing the Chicago-based media company of seeking a “windfall” with its previous legal claim.

In an extraordinary development, the two companies earlier this summer ditched their planned $3.9 billion combination after the FCC raised eleventh-hour concerns about it. The undoing of the deal was primarily a set of “sidecar” arrangements designed to keep Sinclair under the legal limit for total stations. Those deals, however, set off alarms with regulators because the new owners of the stations would have been closely affiliated with Sinclair and therefore enabling them to exert control over the stations they were supposed to have divested under the law.

Sinclair maintains that the suit Tribune filed after the deal was called off is nothing but a cynical ploy to extract profit from an unfortunate turn of events. The suit seeks $1 billion as compensation for allegedly “spectacular” breach of contract.

“We were extremely disappointed that the Tribune transaction was terminated,” said Sinclair CEO Chris Ripley in a statement. “We are likewise disappointed that Tribune, through its meritless lawsuit, is seeking to capitalize on an unfavorable and unexpected reaction from the Federal Communications Commission to capture a windfall for Tribune.”

In the counter-complaint, Ripley added, the company demonstrates that “we fully complied with our obligations under the merger agreement and worked tirelessly to close the transaction.”

Tribune issued its own statement in response to the counter-claim, calling it “entirely meritless.” The filing, the company said, is “simply an attempt to distract from its own significant legal exposure resulting from its persistent violations of Tribune’s contractual rights.”

In Tribune’s view, Sinclair knew that the divestiture plan it presented to the FCC was dubious but proceeded anyway, dooming the transaction. “Tribune looks forward to holding Sinclair accountable in court,” the company said.

President Donald Trump has lamented the demise of the tie-up, given that it snuffed out a conservative media voice. Sinclair, already the No. 1 station group, would have grown far larger and infiltrated major markets like New York, Chicago and LA had regulators given their OK. Tribune remains in play, with No. 2 station group Nexstar or private equity firms likely to take a look. PE firm Blackstone and 21st Century Fox had submitted a bid for Tribune before the company opted for Sinclair.

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