Sinclair countersues Tribune Media over failed merger

WGN

Sinclair Broadcast Group fired back Wednesday against Tribune Media, countersuing the Chicago-based owner of WGN-Channel 9 and WGN 720-AM over the collapse of their proposed merger.

Sinclair’s response came three weeks after Tribune Media filed a $1 billion breach-of-contract lawsuit against Sinclair, alleging the Maryland-based broadcaster botched the original transaction through its “unnecessarily aggressive and protracted negotiations” with the Department of Justice and the FCC.

In terminating the $3.9 billion agreement, Tribune Media walked away from a deal to sell its 42 television stations, the WGN America cable network and WGN Radio. If successful, the acquisition would have have given Sinclair control of 233 stations, reaching 72 percent of U.S. TV households. But the merger was already considered all but dead after the FCC accused Sinclair of “misrepresentation and/or lack of candor” in its application and referred the case to an administrative law judge.

Sinclair Broadcast Group

“Tribune, through its meritless lawsuit, is seeking to capitalize on an unfavorable and unexpected reaction from the Federal Communications Commission to capture a windfall for Tribune,” Sinclair CEO Chris Ripley said in a statement. “We fully complied with our obligations under the merger agreement and worked tirelessly to close the transaction. The company looks forward to vigorously defending against Tribune’s claims and pursuing our own claim.”

In its countersuit, Sinclair said it was simply trying to negotiate the best terms with regulators (which was allowed under the merger agreement), while Tribune remained a full partner in those efforts. “Tribune, Sinclair, and their respective counsel spent months working together to advocate for the transaction with regulators, attending meetings, reviewing drafts of responses, and adjusting the proffered divestitures and the parties’ negotiating positions as needed,” the suit said.

Gary Weitman, senior vice president/corporate relations for Tribune Media, released a statement calling Sinclair’s counterclaim “entirely meritless and simply an attempt to distract from its own significant legal exposure resulting from its persistent violations of Tribune’s contractual rights.”

The statement added: “As detailed in Tribune’s complaint, Sinclair repeatedly and willfully breached its contractual obligations during what should have been a straightforward regulatory review process.  Sinclair’s misconduct culminated in its submitting to the Federal Communications Commission divestiture proposals that led the Commission to order a hearing on the fundamental issue of Sinclair’s lack of candor, thus ending any chance at merger approval in any reasonable timeframe.  Tribune looks forward to holding Sinclair accountable in court.”

Wednesday’s comment of the day: Pat Szpekowski: As a kid, I would listen/watch Jack Brickhouse and his enthusiasm about the Cubs and would euphorically say to myself that I would watch the Cubs on TV until eternity. My team. They cared about me through thick and thin. Now what?