Sinclair buys Tribune Media for $3.9bn

Sinclair’s new acquisition of Tribune Media will create a company that covers most of the US broadcasting market

The acquisition could see Sinclair dominate US local television airwaves
The acquisition could see Sinclair dominate US local television airwaves

On May 8, US television station owner Sinclair Broadcast Group announced its $3.9bn acquisition of fellow broadcaster Tribune Media, in a deal that makes the US’ biggest local television provider even larger. Sinclair, which already owns 173 stations including WGN in Chicago and WPIX in New York, will now expand its balance sheet with all 42 of Tribune’s stations, which currently operate in 33 markets across the US. The combined entity will cover 72 percent of the nation’s television households and generate $4.3bn in annual revenue.

The news prompted Tribune’s shares to rise five percent, while Sinclair’s fell by two. Sinclair will buy all of Tribune’s shares for $43.50 each and will acquire $2.9bn of debt on top of the $3.9bn sale price. The deal is expected to close by the end of 2017.

Competition between broadcasters may be seriously curtailed by the sheer size of the new company under Sinclair

“This is a transformational acquisition for Sinclair that will open up a myriad of opportunities for the company”, said Chris Ripley, Sinclair’s President and CEO. “The Tribune stations are highly complementary to Sinclair’s existing footprint and will create a leading nationwide media platform that includes our country’s largest markets.”

The deal comes less than three weeks after the US Federal Communications Commission (FCC) voted to reverse a 2016 decision to limit the number of stations that broadcasting companies could purchase. Ajit Pai, the new FCC chairman who was appointed by US President Donald Trump earlier this year, subsequently announced plans to review an existing federal law that prevents broadcasting companies from expanding their service to more than 39 percent of US television households.

Even though Sinclair’s coverage will, in reality, exceed that federal cap by a factor of two, the new rules that were agreed by the FCC in April entail that regulators will not count most of those households. As such, Sinclair’s coverage will technically fall below the 39 percent limit, meaning it stands a chance of gaining regulatory approval in the coming months.

Even so, competition between broadcasters may be seriously curtailed by the sheer size of the new company under Sinclair. The proposed entity will decisively outpace its closest rival, Nexstar Media Group, which owns just 170 stations nationwide.

“The acquisition will enable Sinclair to build ATSC 3.0 (Next Generation Broadcast Platform) advanced services, scale emerging networks and national sales, and integrate content verticals”, Ripley said. “The acquisition will also create substantial synergistic value through operating efficiencies, revenue streams, programming strategies and digital platforms.”

Meanwhile, the deal effectively puts to an end a decade of turbulence for Tribune. The Chicago-based media company hit problems after being acquired by billionaire mogul Sam Zell. It emerged from bankruptcy in 2012 and was acquired from Zell by private equity firms, eventually selling off its historic newspaper assets in 2014 in order to stabilise.

Sinclair has seen healthy expansion in recent years, having moved into wireless technology via a collaboration deal with Nexstar earlier this year. The companies’ wireless offerings together span 86 percent of the US.

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