Tribune Media said it has terminated the merger with Sinclair Broadcast Group, which was first proposed in May 2017, and will file a lawsuit for breach of contract, seeking compensation for all losses it incurred.
A sticking point for regulators at the FCC and the Justice Department was a series of side deals that Sinclair had proposed in order to bring the combined company into compliance with regulations on the number of local TV stations a company could own.
Approval of the merger was widely considered inevitable because Trump's FCC chairman, Ajit Pai, is notoriously anti-regulation and pro-merger, and had rolled back ownership rules for broadcast media companies previous year in a manner that seemingly paved the way for the deal.
"In an effort to maintain control over stations it was obligated to sell if advisable to obtain regulatory clearance, Sinclair engaged in belligerent and unnecessarily protracted negations with DOJ and the FCC over regulator requirements... all in the service of Sinclair's self-interest and in derogation of its contractual obligations", the suit alleges. On Thursday, Kern said that any further delays would hurt his company - so the Tribune board chose to spike the deal.
Tribune Media Co.is the parent company of KFSM/KXNW.
The Maryland company did not immediately respond early Thursday to a request for comment from The Associated Press.
Tribune "warned Sinclair repeatedly over many months" that its refusal to comply with required station divestitures was a breach of contract, according to the lawsuit, which seeks to recover at least $1 billion in damages.
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Sinclair has become a significant outlet for conservative views.
Nexstar Media Group (NXST.O) and Twenty-First Century Fox Inc (FOXA.O), partnering with private equity, had considering buying Tribune before Sinclair announced its deal and are likely bidders, analysts have said.
"The lawsuit described in Tribune's public filings today is entirely without merit, and we intend to defend against it vigorously". The so-called sidecar agreement would have kept Sinclair essentially in charge of the Chicago station, with an option to buy it back for the same price within eight years. By one estimate, the combined company would have owned stations in almost 3 out of 4 US households, controlling an enormous amount of the content Americans see on local stations.
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.
Under the terms of the deal, Tribune and Sinclair had the right to call off the deal without paying a termination fee if it was not completed by August 8.
A dozen Senate Democrats said in April Sinclair was deliberately distorting news coverage by forcing local stations to read scripts that criticized what it described as "the troubling trend of irresponsible, one-sided news stories plaguing our country".