Sinclair Sued By Tribune Over Failure Of Merger Worth $3.9 Billion

Sinclair Broadcast Group has bene sued for breach of contract by Tribune Media Company following the scarping of the $3.9 billion merger deal with the former, the company announced on Thursday.

The scrapping of the deal has resulted in bringing an end to a merger that would have created a titan in the television world in the US market as the merged companies would have a total reach of over 70 per cent of the American homes.

But Federal Communications Commission (FCC) of the US had raised questions related to regulatory issues about the deal and Sinclair was charged by Tribune of not keeping its part of the deal that it was supposed to in getting the regulatory approval from the commission.

“Our merger cannot be completed within an acceptable timeframe, if ever,” Tribune CEO Peter Kern said in a statement Thursday morning. “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.”

Sinclair has been criticized for its conservative-leaning coverage and the company has a large number of local television stations throughout the US.

According to the merger deal between the two companies, 42 TV stations the belong to the Chicago-based Tribune was to be bought by Sinclair and it had also agreed to sell off some of its TV stations in order to get the deal through the federal regulatory body.

Serious concerns were about the merger was expressed by the FCC chairman Ajit Pai last month and added that the deal would have to be submitted before an administrative law judge.

At that time, the federal agency was severely criticized by United States President Donald Trump and had come out in defense of Sinclair.

“So sad and unfair that the FCC wouldn’t approve the Sinclair Broadcast merger with Tribune. This would have been a great and much needed Conservative voice for and of the People,” the president had said on Twitter. “Liberal Fake News NBC and Comcast gets approved, much bigger, but not Sinclair. Disgraceful!”

According to the charges placed by Tribune against Sinclair, the later delayed the selling off of its stations as was required under the regulations and had engaged in “unnecessarily aggressive and protracted negotiations” with the FCC and the Department of Justice with the aim of retaining control overt he stations.

If Sinclair had followed the rules, the merger would have got regulatory approval years ago, Tribune said.

According to the agreement the two companies reached last year, a $135m breakup fee could be faced by Tribune. The firms had until midnight Wednesday to call off the deal.

(Adapted from TheGuardian.com)

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Categories: Economy & Finance, Regulations & Legal, Strategy, Uncategorized

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