Tribune-Sinclair Merger Breaks Down, $1 Billion Lawsuit Now In The Works

Tribune-Sinclair Merger Breaks Down, $1 Billion Lawsuit Now In The Works

The collapse of a proposed merger of two giant media companies is a victory for advocates of a diverse press and a defeat for President Trump.

Tribune Media announced Thursday that it was withdrawing from its $3.9 billion acquisition by the Sinclair Broadcast Group. The decision was met with cheers from media activists, who are concerned about the growing consolidation of media ownership; as well as conservative news outlets like Fox News, which feared the increased competition that the merger threatened to create for its parent company.

Trump was outspoken in his support of the deal. Sinclair is hailed by its fans and demonized by its critics as giving a far-right slant to the news. Sinclair has also enthusiastically backed many of the president's controversial policies.

Politico estimated that the merger would have “brought Sinclair's must-run packages of pro-Trump commentary to 72 percent of American TV-viewing homes.” The firm was seeking to gain control of Tribune television stations in New York, Chicago, and 40 other U.S. cities. Sinclair already owns 192 stations.

Last month, the Federal Communications Commission called for further regulatory review of the deal. The agency's chairman, Ajit Pai, said he had “serious concerns.” Trump blasted the FCC and the Republican chairman he appointed, declaring that it was “sad and unfair” to hold up the talks.

One of the factors that raised eyebrows at the FCC was Sinclair's plan to sell stations in Chicago, Dallas, and Houston to other companies. Pai asked for an administrative law judge to look into the matter, which could have dealt the merger a fatal blow.

“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 cannot be completed within an acceptable timeframe, if ever,” Tribune CEO Peter Kern said in a written statement. “This uncertainty and delay would be detrimental to our company and our shareholders.”

Trump reacted by tweeting: “This would have been a great and much needed Conservative voice for and of the People. Liberal Fake News NBC and Comcast gets approved, much bigger, but not Sinclair. Disgraceful!”

Congressman Frank Pallone of New Jersey, the ranking Democrat on the House Energy and Commerce Committee, described the failure of the deal as “a huge win.” He continued: “This merger should have been rejected long ago, and would not have been possible under the old media ownership rules that the Trump FCC weakened last year.” The lawmaker was referring to deregulation that Pai supported.

Karl Frisch, who heads the progressive organization Allied Progress, told Common Dreams: “The collapse of this merger is as major a victory for American consumers as it is a defeat for the propaganda pushers at Sinclair. Dozens of communities will now be spared from nightly force-feedings of content advancing the fringe political agenda of the media behemoth's owners.”

Frisch said combining the companies “would have been extremely dangerous to our increasingly fragile democracy.” He noted that “the leadership at Sinclair has expressed a desire to see a future where local television news stations are controlled by one or two companies.”

Even some of Sinclair's employees were opposed to the merger. Mary Nam, a news anchor at the company's television station in Seattle, tweeted: “When media giants gobble up local news stations, there are repercussions.”

The credit for the deal falling through belongs to “everyone who mobilized, organized and spoke out against it,” according to Free Press CEO Craig Aaron, who called the merger a “terrible” idea. “You did it!” he tweeted. “Thanks to the reporters who stayed on the story. Thank you FCC for taking your job seriously. The end of this merger is a big win for the public!”

However, Frisch warned: “Sinclair isn't likely to learn the right lessons from the collapse of this merger. They will be back. … Remain vigilant.”

As part of its announcement on Thursday, Tribune Media revealed that it had filed a $1 billion lawsuit against Sinclair for alleged breach of contract. Tribune officials accused the company of violating its “contractual obligation to make reasonable best efforts to get regulatory sign-off as quickly as possible.”

In a statement, Tribune Media explained: “Sinclair’s entire course of conduct has been in blatant violation of the merger agreement and, but for Sinclair’s actions, the transaction could have closed long ago. … In meetings with (the Department of Justice), Sinclair invited litigation over station divestitures, summarizing its position to DOJ in two words: 'Sue me.' Indeed, Sinclair went so far as to threaten to file its own lawsuit against DOJ … the polar opposite of what Sinclair had promised.”

Aaron commented that Sinclair's “double-dealing became too much for Tribune executives to bear,” adding: “As details of Sinclair’s deceptions emerge ... it’s reasonable to question whether the broadcaster deserves to hold any licenses to profit off the public airwaves.”

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