Tribune Media Spikes Merger Deal With Sinclair, And Sues Its Former Suitor

Tribune Broadcasting Los Angeles affiliate KTLA 5 is seen in Hollywood Los Angeles

Tribune Broadcasting Los Angeles affiliate KTLA 5 is seen in Hollywood Los Angeles

Tribune Media Co., which is on the hook for a $135 million breakup fee, said Thursday that it is filing a lawsuit against Sinclair, citing breach of contract.

In the lawsuit filed Thursday in Delaware Chancery Court, Tribune Media alleges Sinclair breached its contractual obligations "in spectacular fashion" in a bid to maintain control of WGN-TV and other stations.

Sinclair said in a statement it did not mislead the FCC, but acknowledged the hearing process would've been a "long and burdensome process" and not in the best interest of Tribune's company and shareholders.

The FCC order asked whether Sinclair was in fact the hidden buyer in a proposal to sell Chicago's WGN-TV to a Maryland automobile executive with no prior broadcast experience, and ties to Sinclair management.

Additional reporting from Newsy affiliate CNN.

Sinclair did not immediately respond to a request for comment sent outside business hours. FCC Chairman Ajit Pai flagged "serious concerns" and led a unanimous vote to refer the merger review to an administrative law judge. The deal may also have hit a roadblock with the Justice Department, which reportedly was investigating whether Sinclair and Tribune violated antitrust laws by coordinating TV ad sales efforts in advance of the proposed merger.

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Tribune Media is the parent company of WREG News Channel 3 in Memphis.

Sinclair already has 173 stations around the country, including KENV in Salt Lake City, KOMO in Seattle and WKRC in Cincinnati. "The company believes these class action lawsuits are without merit and intends to vigorously defend against the allegations", Sinclair's earnings release said yesterday. The commissioners called into question whether some of Sinclair's proposed divestments were a "sham" because they were being sold to people so closely aligned with Sinclair and in agreements that would still allow Sinclair to operate the stations.

The merger was opposed by Democratic lawmakers, consumer advocacy groups, small cable companies, and Sinclair competitors.

Like many media stories these days, this one also has a political angle: In recent years, Sinclair and the Smith family have shown favor to President Trump and backed conservative messages.

'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 can not be completed within an acceptable time frame, if ever, ' said Tribune Media Chief Executive Officer Peter Kern. On Thursday, Kern said that any further delays would hurt his company - so the Tribune board made a decision to spike the deal.

"This deal would have contributed to the trend where "local" news and "local" programming is created or scripted out of town and is indistinguishable from cable news", Public Knowledge Senior Policy Counsel Phillip Berenbroick said today. "Broadcasters are supposed to serve their local communities".

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