Report: DOJ Was Days Away From Sinclair-Tribune OK


Did FCC Chairman Ajit Pai effectively thwart the U.S. Department of Justice from delivering its approval of Sinclair Broadcast Group‘s controversial $3.9 billion merger with Tribune Media?

It appears so, “a source familiar with the matter” tells LexisNexis’ Law 360, a top legal news organization.

According to the unnamed source, DOJ was on track to give its thumbs up to the deal. A consent decree was in the works, and would have been released later this week.

This would have seen Sinclair agree to “structural conditions” that included about 10 divestitures.

It was not clear if these stations are in addition to the 21 stations placed into a trust administered by RAFAMEDIA LLC, headed by Richard A. Foreman.

But, analyzing this consent decree would be fruitless — the FCC has made it clear that it is not pleased with many aspects of Sinclair’s proposed merger with Tribune. Among them is the ownership structure of shared services partner Cunningham Broadcasting. As RBR+TVBR reported Tuesday (7/17), Cunningham’s principal shareholders are the offspring of the wife of Sinclair’s founder.

Further, the license for Tribune flagship WGN-9 in Chicago was proposed to be transferred to Steven B. Fader. 

Fader and Sinclair Executive Chairman David D. Smith, formerly President/CEO until January 2017, were partners in Fader’s Summa Holdings Ltd. some 20 years ago.

The transaction as proposed would allow Sinclair to acquire WGN-9 at any time over the next 48 years — assuming the FCC will adjust its national ownership reach cap in Sinclair’s favor.

As of today (7/18), the WGN-9 sale is now scratched. Further, two stations that were to be sold to Cunningham are off the table.

Whether these amendments curry favor with the FCC is yet to be seen. However, Sinclair appears intent on doing whatever it takes to appease the Commission, avoiding a termination of a transaction that would be far more important and transformative for Sinclair than for Tribune, which can find another buyer.