For much of the last year, it’s seemed all but certain that Sinclair Broadcast Group, the conservative local news behemoth known for forcing its anchors to take part in xenophobic fear-mongering and Trump-approved propaganda, was on the cusp of acquiring Tribune Media. Predicated on an ideologically-friendly FCC, the mega-merger was set to drastically expand Sinclair’s nationwide footprint, and bring its infamous must-runs into seven out of 10 American households—including Chicago, Los Angeles, and New York City.
Now, however, the dream of a Fox News-rivaling local news operation appears to be dead. On Thursday, Tribune announced they were pulling out of the deal, and will instead be suing Sinclair for breach of contract.
That stunning collapse, according to Tribune, came as a result of Sinclair’s refusal to meet already-loosened regulatory guidelines—and its shady compliance failures that raised “significant questions” about the legality of Sinclair’s proposal, according to an FCC draft order released last month.
In a statement on Thursday, Tribune Media accused Sinclair of engaging “in unnecessarily aggressive and protracted negotiations with the [DOJ and FCC] over regulatory requirements” and “refusing to sell stations in the markets as required to obtain approval.”
My opinionated summary. Tribune is quitting the merger AND suing Sinclair for being a greedy, manipulative, lying, cheating company so brazen in its tactics that it couldn’t get this deal through the most accommodating FCC in history with a President hungry for it to happen. https://t.co/AxYuV1BOao
— Jay Rosen (@jayrosen_nyu) August 9, 2018
Among the stations that have spent the past year dealing with Sinclair’s apparent duplicity is New York’s own WPIX. Owned by Tribune, the CW-affiliated station was initially supposed to be sold to Cunningham Broadcasting, in order to ensure that the soon-to-be merged company would remain under a nationwide ownership cap. Then, a few months ago, Sinclair suddenly decided to hold onto the local station—a move that sent shock waves through the newsroom, according to one employee who agreed to speak to Gothamist on the condition of anonymity, for fear of retribution from their employer.
“Morale was already running low, but this made things much worse,” the person said during a conversation this past spring, a few weeks after Sinclair made headlines for forcing local hosts to read from a script decrying fake news. “We were told not to share anything about the merger, and as management was preparing for the takeover, there seemed to a chilling effect [on] anti-Trump stories.
“It wasn’t a definitive ‘No we are not doing it.’ It was more ‘Is it worth it?'” the source added. “It’s like everyone with editorial power lost their backbone.”
Asked Thursday how the newsroom was reacting to the announcement of the failed merger, the person noted that most employees were “unfazed,” and had already begun to get a sense that the deal was falling through. At the same time, the uncertainty surrounding the possible acquisition has left the station dispirited and “unorganized,” the source said, with many feeling like they’ve been left in the dark by management and top brass.
The collapse of the merger and new lawsuit, for example, was communicated to employees on Thursday morning, in an email sent by Tribune CEO Peter Kern after the news had been made public. “I saw the email and then went to Twitter and saw that it was trending,” the source said.
Kern’s email (copied in full below) is light on specifics, but notes that “Sinclair did not live up to its obligations under the merger agreement and we intend to hold them accountable.” The executive also acknowledges, “No doubt the rumor mill will begin anew with speculation about who might buy us or who we might buy or whether the regulatory landscape still favors consolidation. We can’t do anything about such speculation.”
You can read the full email below:
Earlier this morning we announced the termination of our proposed merger with Sinclair and that we have filed a lawsuit against Sinclair for breach of contract—attached is the press release we issued a short time ago.
Given the developments of the last few weeks, and the decision by the Federal Communications Commission to refer certain issues to an administrative law judge in light of Sinclair’s conduct, it’s highly unlikely that this transaction could ever receive FCC approval and be completed, and certainly not within an acceptable timeframe. This delay and uncertainty would be detrimental to our company, to our business partners, to our employees and to our shareholders. Accordingly, our Board made the decision to terminate the merger agreement with Sinclair to enable us to refocus on our many opportunities to driver the company forward and enhance shareholder value.
As for the lawsuit, we are confident that Sinclair did not live up to its obligations under the merger agreement and we intend to hold them accountable. A suit like this does not get resolved over night and it is the last thing you should be thinking about, but I want you to know that Tribune did everything it was supposed to do, and we will make sure we are treated fairly.
Right now, I am sure many of you are still absorbing the news and wondering what it means for our company, for our future, and most especially for each of you. I want to take a moment to answer these questions and address some of your concerns as we now re-adjust to the old normal of running our great and storied Tribune Media Company.
So, let’s begin there—Tribune Media remains as strong as ever, with great TV stations, important local news and sports programming, a re-energized and financially powerful cable network, and a terrific history of serving our viewers, our advertisers, and our MVPD and network partners. You need look no further than the exceptional financial results we released today for proof of that. Our consistent success is directly related to your talent, your experience, your innovation, and your willingness to give your best every day.
As for the future, we continue to live in complex times in the media world. New consumer habits, new entrants to the space, new competitors every day, and consolidation going on all around us. Rapid change has become the norm—it’s impossible to predict the next big thing. What I do know, though, is that we’ve got valuable assets, great people running them, and we remain one of the preeminent broadcasting companies in America.
No doubt the rumor mill will begin anew with speculation about who might buy us or who we might buy or whether the regulatory landscape still favors consolidation. We can’t do anything about such speculation. What we can do is rededicate ourselves to our own performance. Let’s shake off the cobwebs of deal distraction, ignore the outside noise, and continue delivering on our commitment to each other, to our customers, to our partners and to the communities we serve. If we do that, the rest will take of itself.
Let’s get together for a companywide town hall meeting tomorrow at Noon ET. We’ll broadcast the meeting live to our business units, talk more about all these issues and take your questions—you can submit questions in advance of the meeting to: firstname.lastname@example.org. In the meantime, if you have any concerns, our HR team is ready to help; and Gary Weitman can handle any media inquiries you might get.
Thank you, again,