Proposed acquisition of Tribune Media by Sinclair Broadcast Group

The attempted acquisition of Tribune Media by Sinclair Broadcast Group was a proposed broadcast media transaction between Sinclair Broadcast Group and Tribune Media. Formally announced on May 8, 2017, the $3.9 billion deal would have resulted in Sinclair owning—or having operational control over—stations available in 72% of all households with a television set in the United States.

The deal received criticism from multiple special interest groups and Democratic and Republican politicians who felt that the deal could give Sinclair an effective oligopoly on television broadcasting. Sinclair's prior track record of running public affairs shows and commentary segments in local newscasts among their station group supportive of conservative platforms induced concern over possible imperiled editorial independence among the Tribune stations, with said programming potentially used by Sinclair for favoritism of Republican presidential and congressional candidates in swing states. Federal Communications Commission (FCC) chairman Ajit Pai also encountered backlash over the deal; prior to the merger announcement, Pai reversed several decades-old policies pertaining to broadcast ownership—along with policies implemented by prior chairman Tom Wheeler—leading some to speculate that Pai instituted those changes to benefit Sinclair.

The purchase attempt was ultimately terminated by Tribune Media on August 9, 2018, after emerging scrutiny over proposed divestitures by Sinclair, prompting the FCC to put the deal up for review and Pai to publicly reject it. Several months after the deal's termination, Tribune Media was successfully acquired by Nexstar Media Group.

This unsuccessful acquisition occurred concurrently with two successful major media mergers: The Walt Disney Company's acquisition of 21st Century Fox and AT&T's purchase of Time Warner.

Background

On February 29, 2016, Tribune announced that it would review various "strategic alternatives" to increase the company's value to shareholders, which include a possible sale of the entire company and/or select assets, or the formation of programming alliances or strategic partnerships with other companies, due to the decrease in its stock price since the Tribune Publishing spin-off and a $385 million revenue write-down for the 2015 fiscal year, partly due to original scripted programming expenditures for WGN America since it converted the cable network from a superstation in 2014.

On March 1, 2017, reports surfaced that Sinclair Broadcast Group was in discussions to acquire Tribune Media, which was approached by Sinclair management about a possible merger deal in late February. Any deal would have been forged pending FCC review of the UHF discount, a rule enacted by the agency in 1985 with the intent of encouraging ownership of UHF television stations by subtracting their total market coverage by 50% of their overall signal distribution, which had been eliminated in a 3–2 vote led by former FCC chairman Tom Wheeler in September 2016 because of its obsolescence on technological grounds. (UHF stations transmitting over the ATSC digital format have improved signal reception compared to those which broadcast over the NTSC analog standard prior to the 2009 analog-to-digital transition for full-power television stations.) Such a deal would complement Sinclair, as it only had an 11% market overlap with Tribune and required minimum divestment of broadcasting assets; additionally, Sinclair would expand its reach within the top-10 markets, which currently consist of two television properties in Washington, D.C.: one television station, ABC affiliate WJLA-TV (channel 7), and its associated 24-hour cable news channel, NewsChannel 8 (now WJLA 24/7 News). Reports later stated that Sinclair was offering to buy Tribune at a per-share price in the high $30s.

The reports of Sinclair's interest in acquiring Tribune led several unnamed station owners – which also inquired about purchasing some or all of Tribune's assets outright or through a consortium – as well as leading Tribune shareholder Starboard Value to approach 21st Century Fox about taking options to thwart the deal as a defensive measure; the major impetus was that a combination of Sinclair (which is already the largest Fox affiliate operator by station count, with 54 primary and subchannel-only affiliates) and Tribune (the network's largest affiliate operator by total market reach, as its 14 Fox stations are concentrated in top-50 markets) would potentially result in Sinclair obtaining leverage over 21st Century Fox in reverse compensation negotiations for its Fox- and MyNetworkTV-affiliated stations (the 68 Fox affiliates that the two companies own, in particular, cover a combined 28% of the U.S.). These reports were confirmed on May 8, when Sinclair announced that it would acquire Tribune for $3.9 billion,Economist, Business Section, May 13–19, 2017, page 6 along with the assumption of Tribune's $2.7 billion debt load; it beat Irving, Texas-based broadcaster Nexstar Media Group, which at the time was not willing to make a higher bid closer to Tribune's appraisal price, for the stations.

Assets that would have been acquired

Had the merger been successful, Sinclair would have acquired the majority of the 42 television stations owned and/or operated by Tribune Broadcasting and their associated digital properties, along with two websites not associated with any television stations. Tribune has stations in the five largest media markets – CW affiliate WPIX (channel 11) in New York City, CW affiliate KTLA (channel 5) in Los Angeles, independent station WGN-TV (channel 9) in Chicago, MyNetworkTV affiliate WPHL-TV (channel 17) in Philadelphia, and CW affiliate KDAF (channel 33) in Dallas–Fort Worth in order from #1 through #5 – adding to Sinclair's existing station property in a Top 10 market, WJLA-TV ( Washington, D.C./ Hagerstown), which would have been supplanted as the largest market in which Sinclair owned a station (Sinclair would also have gained a duopoly in D.C. with the acquisition of CW affiliate WDCW). The two websites that were to have been acquired by Sinclair were entertainment news and television listings service Screener (also known as Zap2It) and its subsidiary website TV by the Numbers. On the radio side, Sinclair would also have acquired ownership of WGN (720 AM) in Chicago, which was Tribune's lone radio property.

Also acquired would have been the following assets associated with WGN-TV:
* WGN America – a cable-satellite television network that formerly served as the superstation feed of WGN-TV from November 1978 until December 2014
* Antenna TV – a digital multicast network focusing on classic television sitcoms
* Chicagoland Television (CLTV) – a regional cable news channel founded by Tribune in January 1993 and shares resources with the WGN-TV news department
* Tribune (FN) Cable Ventures Inc. – an umbrella cable television network unit

The following equity stakes would also have been acquired by Sinclair:
* A 50 percent stake in This TV (co-owned with MGM Holdings)
* A 30 percent stake in each of the Food Network and Cooking Channel (majority owned by Discovery, Inc.)

With the purchase of Tribune, speculation arose about how Sinclair would utilize WGN America, which was in the process of shifting away from scripted content at the time of the purchase announcement. Sinclair CEO Christopher Ripley stated that it would de-emphasize high-end scripted series from WGN America's programming slate (an effort undertaken by Tribune beginning in 2015, following its reformatting of the network from serving as the superstation feed of WGN-TV into a conventional entertainment-based basic cable channel devoid of WGN-TV's news and sports programming); Ripley cited that the network's original programming budget was unjustified based on the channel's ratings (while not among the top 25 highest-rated cable networks, WGN America's viewership had gradually increased since the introduction of original scripted series, posting its highest monthly ratings in March 2017, during which it total viewership averaged 446,000 viewers and viewership among adults ages 25 to 54 totaled at 157,000).

Media analysts revived speculation tracing to the group's January 2016 purchase of Tennis Channel that Sinclair would launch a conservative-leaning cable news rival to Fox News, Newsmax TV and One America News Network (OANN) to suggest that Sinclair would use the network's existing wide national reach to launch such an effort over WGN's existing transponder and channel space. However, '' Variety'' reporter Cynthia Littleton noted in a May 8, 2017, article that launching a national news venture would create undue financial risk by adding further debt to that Sinclair had accrued since it began its spate of station purchases with the 2011 acquisition of Four Points Media Group (estimated at $3.268 billion as of March 31, 2017) as well as the debt it would have assumed through the Tribune deal. Former professional wrestling executive Eric Bischoff also posited during a Q&A session on his official Periscope account on March 14, 2018, that the Sinclair-Tribune deal would allow the former to utilize WGN America to expand the reach of Ring of Honor – which has produced a weekly program, '' Ring of Honor Wrestling'', that has been syndicated to the group's television stations since shortly after Sinclair bought the wrestling promotion in 2011 – in a manner similar to how the Turner Broadcasting System utilized World Championship Wrestling (WCW) and its predecessors (including Jim Crockett Promotions and Georgia Championship Wrestling) from the 1970s until the early 2000s through TBS and TNT. Had the acquisition gone through and the promotion moved its broadcasts to the network, ''Ring of Honor Wrestling'' would have marked WGN America's first foray into professional wrestling since '' WWE Superstars'' left the network in 2011.

Tribune Media's former newspaper division, then called Tronc (Tribune Online Content; the company was renamed to its former Tribune Publishing moniker in November 2018), would not have been part of the merger as it was spun off from Tribune in August 2014. Many Tronc-owned newspapers posted disclaimers that they were no longer operated as part of the former Tribune parent company when covering the Sinclair–Tribune merger, including within articles that had originally been written by the Associated Press and Reuters and syndicated to those publications.

Proposed divestitures and sales

Although Sinclair intended to acquire all of Tribune's television stations, in order to comply with FCC ownership regulations forbidding either common ownership of two of the four highest-rated stations or more than two stations in the same market as well as to comply with national ownership caps, Sinclair planned to flip 22 of the stations – fifteen owned by Tribune and seven stations owned and/or operated by Sinclair – to other buyers (although it would have ultimately retained control of stations in top-10 markets). Prior to its referral to an administrative law judge, the divestitures were reduced to 18 stations, with Sinclair choosing to rescind proposals to sell four television stations located in top-10 markets to third-party entities and instead directly acquire them.

Stations marked for divestiture

Sinclair proposed station divestitures to the following entities to ensure compliance with local and national ownership restrictions: († - owned by Sinclair)
*To Cunningham Broadcasting
**WPIX (channel 11), New York City, New York – affiliated with The CW
**KDAF (channel 33), Dallas–Fort Worth, Texas – affiliated with The CW
** KIAH (channel 39), Houston, Texas – affiliated with The CW
Cunningham Broadcasting acts as an effective subsidiary of Sinclair Broadcast Group, as its shareholding structure consists of trusts controlled by the estate of Carolyn C. Smith, who was the wife of Sinclair's founder Julian Sinclair Smith, in the name of Julian's four sons, all of whom (including current Sinclair executive chairman David D. Smith) are also the majority owners of Sinclair.

*To WGN-TV, LLC
**WGN-TV (channel 9), Chicago, Illinois – operated as an independent station
*To Fox Television Stations
** KCPQ (channel 13), Seattle, Washington – affiliated with Fox
** KDVR (channel 31), Denver, Colorado – affiliated with Fox
** KSTU (channel 13), Salt Lake City, Utah – affiliated with Fox
** KSWB-TV (channel 69), San Diego, California – affiliated with Fox
** KTXL (channel 40), Sacramento, California – affiliated with Fox
** WJW (channel 8), Cleveland, Ohio – affiliated with Fox
** WSFL-TV (channel 39), Miami, Florida – affiliated with The CW

The purchase of WSFL raised the specter that Fox planned to convert it into an owned-and-operated station of the Fox Broadcasting Company to replace Sunbeam Television flagship station WSVN (channel 7), which had been serving as the network's Miami affiliate since January 1, 1989. (KCPQ would eventually be acquired by Fox in a separate transaction.)

*To Howard Stirk Holdings
** KAUT-TV (channel 43), Oklahoma City, Oklahoma – operated as an independent station
** KMYU (channel 12), St. George, Utah – affiliated with MyNetworkTV†
** KUNS-TV (channel 51), Bellevue, Washington – affiliated with Univision†

Howard Stirk Holdings acts as a partner company to Sinclair and is owned and controlled by Armstrong Williams, an African-American conservative political commentator who hosts ''The Right Side with Armstrong Williams'', a political discussion program syndicated to Sinclair-operated and Stirk-owned stations. The company was originally formed in April 2013 to acquire NBC affiliate WEYI-TV (channel 25) in Flint, Michigan and CW affiliate WWMB (channel 21) in Myrtle Beach, South Carolina as part of its purchase of Barrington Broadcasting, and, in December 2014, began operating stations independently of Sinclair – located in Tuscaloosa and Anniston, Alabama (WCFT ow WSES">WSES.html" ;"title="ow WSES">ow WSESand WJSU-TV [now WGWW">WSES">ow_WSES<_a>.html" ;"title="WSES.html" ;"title="ow WSES">ow WSES">WSES.html" ;"title="ow WSES">ow WSESand WJSU-TV [now WGWW]) and Charleston, South Carolina (WCIV [now WGWG]), all three of which were formerly ABC affiliates and became affiliated with digital multicast-originated networks upon coming under the purview of Howard Stirk – through spin-offs made as part of that group's purchase of Allbritton Communications.

As with the Cunningham sales, Sinclair intended to hold operational control of the three stations through shared services agreements.

*To Meredith Corporation
** KPLR-TV (channel 11), St. Louis, Missouri – affiliated with The CW
*To Standard Media
** KDSM-TV (channel 17), Des Moines, Iowa – affiliated with Fox†
** KOKH-TV (channel 25), Oklahoma City, Oklahoma – affiliated with Fox†
** WPMT (channel 43), York, Pennsylvania – affiliated with Fox
** WRLH-TV (channel 35), Richmond, Virginia – affiliated with Fox†
** WQMY (channel 53), Williamsport, Pennsylvania – affiliated with MyNetworkTV
** WXLV-TV (channel 45), Greensboro, North Carolina – affiliated with ABC†
** WXMI (channel 17), Grand Rapids, Michigan – affiliated with Fox

Also to have been transferred to Standard Media as part of the Standard General agreement would be the local marketing agreements to Fox affiliate WOLF-TV (channel 56) in Hazleton and CW affiliate WSWB (channel 38) in Scranton, Pennsylvania, which were locally owned by New Age Media and operated alongside Sinclair-owned WQMY. (All three stations serve the Scranton– Wilkes-Barre television market.)

Overview of proposed divestitures

To comply with Department of Justice antitrust and FCC ownership regulations (assuming a draft of the latter agency's media ownership review was unable to receive Congressional approval), Sinclair Broadcast Group was expected to likely be required to sell stations owned by either Tribune or Sinclair in up to twelve markets in order to address ownership conflicts associated with the Tribune acquisition. The most significant conflicts exist in Seattle, Salt Lake City, Oklahoma City, Harrisburg– Lancaster– Lebanon– York and Grand Rapids– Kalamazoo– Battle Creek, where Sinclair and Tribune each have two stations that rank among the four highest-rated in terms of total viewership and maintain news departments. Other divestitures or signal reshuffling were likely to be required in St. Louis, Portland, Oregon, Norfolk/ Virginia Beach/ Hampton, Greensboro/ Winston-Salem/ High Point, Richmond, Scranton/ Wilkes-Barre and Des Moines where ownership regulations would be violated (either because Sinclair already had or would have operational stewardship of three or more stations, or just two stations with too few independent station owners to permit a duopoly). Presumptive of the cap not being raised any further, Sinclair would also have to divest certain stations in non-conflict markets that would put its total reach over the current 39% coverage limit on national station ownership. (The enlarged group would effectively cover nearly 72% of the U.S., but would still reach over 45% coverage even with the UHF discount factored in.) Sinclair CEO Christopher Ripley stated that the company would consider full divestitures of any conflict stations to independent buyers (stating the markets where station divestitures were likeliest to occur, to comply with antitrust regulations on advertising share, are in Seattle, Scranton/Wilkes-Barre and Salt Lake City).

On August 2, 2017, reports surfaced that Fox Television Stations was in talks with Ion Media to create a joint venture that would own the respective stations of both groups. The partnership was said to include plans to shift Fox network affiliations from Sinclair stations to Ion-owned stations, such as those in which affiliation agreements were set to expire by the end of 2017. Fox was reportedly concerned about Sinclair's growing influence, and that its conservative syndicated news inserts would harm its cable news channel, Fox News. It had been suggested that the proposed partnership was meant to place pressure on Sinclair to divest some of the Fox stations owned by Sinclair and (especially) Tribune, because of the market share that it would have if the deal were to be consummated. The Ion stations have historically had little local staff, infrastructure, or programming, including local news (having terminated news share agreements that allowed them to rebroadcast newscasts from major network affiliates in their respective markets in July 2005 upon the rebranding of the former Pax TV to i: Independent Television, the brand preceded the network's January 2007 relaunch as Ion Television), leading an analyst to consider the plan unfeasible. Sinclair's stock prices slipped following the news. On October 19, 2017, Tribune Media shareholders approved the $3.9-billion acquisition by Sinclair.

On November 29, 2017, it was reported that Sinclair Broadcast Group – which attempted to convince the Assistant Attorney General of the Department of Justice Antitrust Division, Makan Delrahim, to relax rules pertaining to a broadcast television combination's total advertising share within a media market but was denied in their efforts – was reportedly close to a deal with the U.S. Department of Justice to sell thirteen unspecified television stations (although Sinclair had attempted to gain DOJ permission to divest only ten stations) as a condition of the approval for its $3.9 billion acquisition of Tribune Media. Nexstar Media Group, Tegna Inc. and the Meredith Corporation were among the groups that reportedly made offers to acquire the divested outlets. Fox Television Stations (FTS) also was reported to have entered into negotiations to acquire between six and ten stations, among those involved in the DOJ consent agreement and/or those already owned by Sinclair or Tribune that are located in markets where neither groups' stations conflict with FCC rules (among them, KCPQ and its MyNetworkTV-affiliated sister KZJO in Seattle, the former of which was earlier sought by Fox in 2014 in a failed attempt to leverage KCPQ's Fox affiliation in order to convince Tribune into selling as part of the group's attempt to expand its reach in markets with NFL franchises based in the National Football Conference, to which the Fox network holds national broadcast television rights).

On December 6, 2017, reports stated that FTS would purchase up to 10 Fox-affiliated stations from Sinclair (all in NFL markets), in order to allow the latter to reduce the acquisition's effects on its reach under national ownership cap limits. The deal would have purportedly included Tribune's Seattle duopoly of Fox affiliate KCPQ and MyNetworkTV affiliate KZJO, since Sinclair already owns ABC affiliate KOMO-TV (channel 4) and Univision affiliate KUNS-TV. Other Fox affiliates owned by either Sinclair or Tribune involving NFL markets include former O&Os in Cleveland (WJW), Denver (KDVR), Kansas City ( WDAF-TV, channel 4) and Milwaukee (WITI, channel 6) as well as stations in Baltimore ( WBFF, channel 45), Buffalo ( WUTV, channel 29), Green Bay ( WLUK-TV, channel 11), Indianapolis ( WXIN, channel 59), Nashville (WZTV, channel 17) and Pittsburgh ( WPGH-TV, channel 53). Of these markets, only Milwaukee had overlapping properties operated by both Sinclair and Tribune that were in conflict with FCC regulations, as Sinclair owned CW affiliate WVTV (channel 18) and MyNetworkTV affiliate WCGV (channel 24, which had its license terminated and intellectual assets merged into a digital subchannel of WVTV through the sale of its broadcast spectrum through the 2017 spectrum incentive auction); the Baltimore station, being Sinclair's flagship, likely would not have been sold in any event as the nearest Tribune properties to it were in Washington, D.C. (WDCW), Philadelphia (WPHL-TV) and Harrisburg (WPMT). FTS was also reported to be considering exchanging the Orlando duopoly of WOFL (channel 35) and WRBW (channel 65) as well as Ocala semi-satellite WOGX (channel 51) to Sinclair in return. After the Department of Justice approved the Sinclair–Tribune deal, it was reported that Fox would be purchasing KCPQ/KZJO in Seattle, and was at least interested in the Tribune-owned Fox affiliates in Cleveland, Denver, Kansas City, and San Diego ( KSWB-TV, channel 69), as well as some of the other aforementioned Fox affiliates owned by Sinclair and Tribune. The then-ongoing acquisition of the 20th Century Fox film and television production units and certain related cable television assets by The Walt Disney Company – which was precluded from acquiring the Fox network and Fox Television Stations as these properties were spun-off into Fox Corporation due to FCC local ownership restrictions as well as a rule barring common ownership of any two of the four major broadcast networks, as Disney already owned ABC and its eight owned-and-operated stations – would reportedly fund the acquisition of stations by Fox.

On February 21, 2018, Sinclair informed the FCC that it would sell CW affiliate WPIX in New York City to Cunningham Broadcasting for a below market-value price of $15 million, receiving an option to acquire WPIX outright. It also announced that it planned to sell off Tribune-owned stations in Chicago (WGN-TV) and San Diego (KSWB-TV), while intending to seek waivers to purchase the Tribune stations in Indianapolis (WXIN and CBS affiliate WTTV hannel 4as well as its Kokomo-based satellite WTTK hannel 29, South Central Pennsylvania (WPMT and CBS affiliate WHP-TV hannel 21 and North Carolina's Piedmont Triad region (WXLV and Fox affiliate WGHP hannel 8 under relaxed rules that allowed for case-by-case acquisitions of two stations ranked among the top four in terms of overall viewership. Sinclair intended to enter into local marketing agreements to handle programming and advertising sales for WPIX and WGN-TV, and sell off KSWB outright to an independent third-party licensee. Overlapping stations in Seattle, St. Louis, Salt Lake City, Oklahoma City, Grand Rapids, Richmond and Des Moines, Iowa would be sold off to unaffiliated third parties. On February 28, 2018, Tribune announced the sale of WGN-TV to WGN-TV LLC (a limited liability company to have been controlled by Steven Fader, a Baltimore-based automotive executive with close business ties to Sinclair executive chairman Smith) for $60 million, intending to operate it under a master services agreement and receiving an option for Sinclair to buy WGN-TV outright within eight years.

On April 24, 2018, Sinclair filed an amendment to the Tribune acquisition, withdrawing the sale of WPIX to Cunningham to acquire WPIX directly and proposing the sale of 22 other stations to both independent and affiliated third-party companies to comply with FCC and DOJ rules. CW affiliate KPLR-TV in St. Louis would be sold to the Meredith Corporation (owner of CBS affiliate KMOV, channel 4) for $65 million. Cunningham Broadcasting was to have acquired three stations in Dallas (KDAF), Houston (KIAH) and Seattle (KUNS-TV) for a combined $63.8 million; while Howard Stirk Holdings was to have acquired Sinclair stations in Seattle (KZJO) and Salt Lake City (KMYU) and a Tribune station in Oklahoma City (KAUT-TV) for a combined $4.95 million; and Standard Media – a broadcast holding company formed by private equity firm Standard General – would have bought seven stations from Sinclair in Oklahoma City (KOKH-TV), Greensboro (WXLV-TV), Richmond (WRLH-TV), Scranton-Wilkes-Barre (WQMY and master services agreements involving sister stations WSWB and WOLF-TV) and Des Moines (KDSM-TV), and two from Tribune in Grand Rapids (WXMI) and Harrisburg (WPMT) in a $441.1-million group deal. In four of the affected markets, Sinclair would have formed new duopolies or virtual triopolies involving existing stations that would have been separated from their existing duopoly partners and Tribune-owned stations in those markets:
* In St. Louis, Sinclair would have directly acquired Tribune-owned Fox affiliate KTVI (channel 2) to form a duopoly with ABC affiliate KDNL-TV (channel 30);
* in Portland, Sinclair would have directly acquired Tribune-owned CW affiliate KRCW-TV (channel 33) to form a duopoly with ABC affiliate KATU (channel 2);
* in Oklahoma City, Sinclair would have directly acquired Tribune-owned NBC affiliate KFOR-TV (channel 4) to form a virtual triopoly involving CW affiliate KOCB (channel 34) and KAUT-TV, the latter of which Howard Stirk would lease operational rights to Sinclair under a shared services agreement;
* and in Greensboro, Sinclair would have directly acquired Tribune-owned WGHP to form a duopoly with MyNetworkTV affiliate WMYV (channel 48).

On May 9, 2018, Fox Television Stations confirmed that it would acquire Fox affiliates KCPQ in Seattle, KDVR in Denver, WJW in Cleveland, KTXL in Sacramento, KSWB-TV in San Diego and KSTU in Salt Lake City, and CW affiliate WSFL-TV in Miami for $910 million in cash and value stock. In exchange for the seven Tribune-owned Fox affiliates, Sinclair received options to purchase primary CW affiliate/secondary MyNetworkTV owned-and-operated station WPWR-TV (channel 50) in Chicago and Fox owned-and-operated station KTBC (channel 7) in Austin, Texas from Fox Television Stations. (A purchase of KTBC would have resulted in an ownership conflict for Sinclair in Austin as the group already owns CBS affiliate KEYE-TV hannel 42 which both fall within the FCC's top-four market viewership restrictions.)

Amid objections by the Justice Department, Sinclair terminated the planned sale of KPLR to Meredith on May 15. (The termination of the sale likely resulted from similar viewership and advertising market conditions in St. Louis that scuttled a 2013 proposal by the Gannett Company

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