Sinclair Revises Divestiture Plan to Save Tribune Merger, Denies Misleading FCC
Sinclair Broadcast Group has vowed to revise its station divestiture plan in an effort to salvage its $3.9 billion acquisition of Tribune Media.
Sinclair, in a lengthy statement issued Wednesday, has also strongly denied any effort to mislead the FCC. The company it was “shocked” earlier this week when FCC chairman Ajit Pai raised concerns about the legality of its plan to maintain operational control of the stations by selling them to entities with ties to Sinclair.
The revised plan calls for Sinclair to acquire Tribune’s WGN-TV Chicago as part of the larger transaction. Sinclair is proposing that Tribune-owned stations in Dallas (KDAF-TV) and Houston (KIAH-TV) will be put into a divestiture trust and sold in an arm’s length transaction by an independent trustee after the Tribune sale is closed.
Sinclair said its conversations with “sources at the FCC” indicated those three stations were the focus of Pai’s concern. On Monday, Pai began the process of sending Sinclair’s divestiture plan to a judge for an administrative review hearing. That promised to prolong the regulatory review process of the merger agreement struck in May 2017. It’s unclear if Sinclair’s latest proposal will clear the path for a sign-off on the deal by the FCC and Justice Department.
Pai has the votes to send the merger to an administrative hearing, but the actual order had yet to be finalized as of Tuesday. A fourth commissioner, Michael O’Rielly, said that he wanted language included to set a timeframe for the review. An FCC spokesman said that they had no immediate comment on Sinclair’s latest statement.
The Sinclair-Tribune deal has stirred opposition from many quarters given that it would make Sinclair by far the nation’s largest TV station owner with more than 200 stations under one roof.
“While we understand that certain parties, which oppose the transaction object to certain of the buyers based on such buyers’ relationships with Sinclair, at no time have we withheld information or misled the FCC in any manner whatsoever with respect to the relationships or the structure of those relationships proposed as part of the Tribune acquisition,” Sinclair spokesman Ronn Torossian said. “Any suggestion to the contrary is unfounded and without factual basis.”
Sinclair’s divestiture plan for the deal has raised hackles from the start. Initially, the company planned to sell WPIX-TV New York and WGN-TV at below-market prices to entities with ties Sinclair. In April, Sinclair revised that plan, deciding to keep WPIX but sell WGN-TV, KDAF and KIAH to Cunningham Broadcasting, which has ties to Sinclair executives.
Sinclair has identified a total of 23 stations that will be sold to comply with federal TV station ownership rules. Sinclair already has an agreement to sell nine medium-sized market stations to Fox Television Stations after the Tribune deal closes. Fox is unlikely to be a contender for the Dallas or Houston stations because it already owns two stations in both of those markets.
Here is Sinclair’s full statement:
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