With Sinclair Broadcast Group remaining tight-lipped about its shaky merger plans with Tribune Media during Wednesday’s Q2 2018 conference call, many Wall Street observers wondered if the deal was headed to the dumpster, as August 8 marked the first day either party could walk away from the controversial combination of the two companies.
At 6:25am Eastern Thursday (8/9), taps was played. Tribune was the bugler.
Tribune Media Company announced that it has snuffed its merger agreement with Sinclair Broadcast Group.
Furthermore, Tribune has confirmed that it has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract. The lawsuit seeks compensation for all losses incurred as a result of Sinclair’s material breaches of the Merger Agreement.
A copy of the lawsuit will be posted on the Tribune Media website as soon as it has been made publicly available by the Court; RBR+TVBR will provide any pertinent details of this complaint to readers.
Tribune’s pre-market statement early Thursday notes that, in the Merger Agreement, Sinclair committed to use its reasonable best efforts to obtain regulatory approval as promptly as possible, including agreeing in advance to divest stations in certain markets as necessary or advisable for regulatory approval.
“Instead, in an effort to maintain control over stations it was obligated to sell, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the FCC over regulatory requirements, refused to sell stations in the markets as required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay—all in derogation of Sinclair’s contractual obligations,” Tribune said. “Ultimately, the FCC concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC’s ownership rules and, accordingly, put the merger on indefinite hold while an administrative law judge determines whether Sinclair misled the FCC or acted with a lack of candor.”
Tribune hints that there’s more on the subject in the complaint filed Thursday morning.
In short, Tribune is very displeased with Hunt Valley, Md.-based Sinclair.
“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, assailing its now ditched-at-the-altar former partner.
“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 Media CEO Peter Kern. “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.”