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Tribune Media files suit, terminates Sinclair tie-up deal

Tribune Media files suit, terminates Sinclair tie-up deal

Not only is it pulling out of the deal, but Tribune is suing Sinclair, arguing Sinclair's negotiations with the US Justice Department and FCC were "unnecessarily aggressive". Sinclair already own 39% of the TV stations in the United States, and this would have raised that to 42%.

'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 can not be completed within an acceptable time frame, if ever, ' said Tribune Media Chief Executive Officer Peter Kern.

Sinclair Broadcast Group Inc. wanted the Chicago company's 42 TV stations and had agreed to dump nearly two dozen of its own to score approval by the Federal Communications Commission.

According to Tribune, Sinclair's entire course of conduct has been in blatant violation of the merger agreement and without Sinclair's actions the transaction could have closed long ago. "Instead, Sinclair fought, threatened, insulted, and misled regulators in a misguided and ultimately unsuccessful attempt to retain control over stations that it was obligated to sell". In addition, Tribune said, Sinclair outright refused to sell station in some markets.

In the lawsuit filed Thursday in Delaware Chancery Court, Tribune Media alleges Sinclair breached its contractual obligations "in spectacular fashion" in a bid to maintain control of WGN-TV and other stations. Its portfolio of 42 local TV stations as well as assets such as the WGN America cable network, were viewed as attractive and will likely remain so given the company's consistent financial performance of late.

Analysts expect Tribune to seek another buyer.

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Under the terms of the deal, Tribune and Sinclair had the right to call off the merger without paying a termination fee if it was not completed by August 8.

Sinclair did not immediately respond to requests for comment. The Tribune deal, plus other pending acquisitions, will give Sinclair a total of 233 TV stations. Complicating matters is that Pai is under investigation for relaxing FCC rules to allow groups like Sinclair to add more stations.

The backstory: The deal was thought to be a sure thing, but the FCC threw a wrench into it after Chairman Ajit Pai, who is favorable to industry consolidation, raised questions about the validity of some of the deal terms provided to the commission by Sinclair.

In a surprise move in July, however, Pai said he had "serious concerns" and suggested Sinclair was trying to hide anticompetitive practices in its proposed purchase and divestiture of certain stations.

It was admonished by media watchdogs in April after dozens of Sinclair news anchors read an identical script expressing concern about "one-sided news stories plaguing the country".