The WGN Radio sign, one of Tribune's stations that would have been part of a deal with Sinclair, appears on the side of Tribune Tower, in downtown Chicago. | Kiichiro Sato/AP Photo Tribune pulls out of Sinclair deal as conservative broadcaster's expansion plan collapses

Tribune Media on Thursday withdrew from its $3.9 billion acquisition at the hands of Sinclair Broadcast Group and announced it's suing the conservative mega-broadcaster for at least $1 billion, alleging breach of contract.

The company said Sinclair failed to uphold its contractual obligation to make reasonable best efforts to get regulatory signoff as quickly as possible. "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," Tribune said in a statement.


Sinclair flouted norms and antagonized federal regulators, Tribune alleges in its suit, filed Thursday in the Delaware Chancery Court. “In meetings with DOJ, Sinclair invited litigation over station divestitures, summarizing its position to DOJ in two words: ‘sue me,’” Tribune wrote in the court document.

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“Indeed, Sinclair went so far as to threaten to file its own lawsuit against DOJ,” Tribune added. That’s “the polar opposite of what Sinclair had promised" when it pledged through its merger agreement to "avoid even a threat of litigation with regulators."



Despite the enthusiastic backing of President Donald Trump, Sinclair's bid to massively expand by rolling up Tribune met opposition across the political spectrum. The deal's collapse is a victory for the company's many liberal critics, but also for conservative rivals like Fox News and Newsmax, whose CEO, Chris Ruddy, raised his misgivings directly with an unmoved Trump.

“The broadcast giant's double-dealing became too much for Tribune executives to bear,” Craig Aaron, president of public interest group and deal opponent Free Press, said in a statement. “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.”

The move follows the Federal Communications Commission's decision to send the deal into regulatory purgatory — a step Trump called "sad and unfair." FCC commissioners voted unanimously July 18 to send the transaction through a lengthy administrative process viewed as a deal-killer. Republican Chairman Ajit Pai advanced the order, saying he had “serious concerns” about the merger.

As originally proposed in May 2017, the tie-up would have brought Sinclair's must-run packages of pro-Trump commentary to 72 percent of American TV-viewing homes. The company then proposed to pick up 42 Tribune TV stations in key markets, including New York and Chicago, boosting its efforts to compete nationally with Fox News. Sinclair now operates 192 stations.

Sinclair revised the deal several times in attempts to comply with station ownership limits, but the FCC was troubled by the broadcaster’s plan to sell stations in Chicago, Dallas and Houston to close business associates.

Pai ultimately said he wanted an administrative law judge to review the station spinoffs. The FCC has used the prospect of an administrative law hearing to kill deals in the past, including with Comcast's unsuccessful bid for Time Warner Cable.

“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,” said Tribune CEO Peter Kern in a statement.

“This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable,” he continued.

The tensions had been mounting for some time. Behind closed doors, Tribune grew so frustrated it threatened to sue Sinclair on Feb. 14 over Sinclair’s negotiations with the Justice Department, according to Thursday's filing.



The $1 billion represents what Tribune says is a lost premium the deal would have delivered to its shareholders. Tribune also seeks additional damages of “an amount to be proven at trial.”

Trump had slammed the FCC's move in a tweet July 24.

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

When asked about the president’s tweet during a congressional oversight hearing, Pai said, “I stand by our decision.”

Pai’s move to doom the deal was a stunning reversal of fortune for Sinclair. Throughout his tenure, the Trump appointee pushed deregulatory reforms to the agency’s media ownership rules that critics like Democratic Commissioner Jessica Rosenworcel said were “custom-built” for Sinclair.

The Sinclair-Tribune merger was made possible by Pai’s decision to restore a regulatory loophole that allows broadcasters to evade federal ownership limits by counting only half the reach of some TV stations. That decision recently survived a challenge in the D.C. Circuit Court of Appeals.

New Jersey Rep. Frank Pallone, top Democrat on the House Energy and Commerce panel, called Tribune's withdrawal “a huge win” on Twitter on Thursday and said, "This merger should have been rejected long ago, & would not have been possible under the old media ownership rules that the Trump FCC weakened last year."

