Sinclair counter-sues Tribune over failed merger

Sinclair counter-sues Tribune over failed merger
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Sinclair Broadcast Group has filed a counter-lawsuit against Tribune Media, heightening a legal battle between the two companies that erupted following the implosion of their proposed $3.9 billion merger.

Sinclair on Wednesday filed its response to Tribune’s original lawsuit from earlier this month, alleging that its would-be partner reneged on their merger agreement by not doing everything possible to see that the deal closed.

The merger’s chances of obtaining regulatory approval dissolved last month when Federal Communications Commission (FCC) Chairman Ajit Pai unexpectedly announced that he had “serious concerns” about a series of side deals that Sinclair had proposed. Those deals were intended to make sure that the companies abided by media ownership restrictions.

“We were extremely disappointed that the Tribune transaction was terminated,” Sinclair CEO Chris Ripley said in a statement. "We are likewise disappointed that 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."

"As described in our filing, we fully complied with our obligations under the 
merger agreement and worked tirelessly to close the transaction," Ripley added.  "The Company looks forward to vigorously defending against Tribune’s claims and pursuing our own claim.” 

Tribune had alleged in its lawsuit that Sinclair torpedoed the merger by pushing the proposals, but on Wednesday Sinclair responded by saying that Tribune had not raised any objections during the process.

“Tribune was a full and active partner in this process and approved of the Parties’ shared strategy for seeking FCC approval,” the filing in Delaware Chancery Court reads. “Indeed, while Tribune raised objections from time to time to the approach to the DOJ review, it did not do so with respect to the filings made in the FCC review.”

A spokesman for Tribune was not immediately able to comment.

After Pai's surprise announcement on July 16, the FCC voted to refer the merger to a costly administrative law proceeding, ultimately prompting Tribune to back out of the deal. The commission alleged that Sinclair had tried to mislead regulators about the side deals, which involved selling valuable television stations to owners with ties to Sinclair.

“Sinclair’s counterclaim to Tribune’s complaint is entirely meritless and simply an attempt to distract from its own significant legal exposure resulting from its persistent violations of Tribune’s contractual rights," Tribune said in a statement.
"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," the statement added. "Tribune looks forward to holding Sinclair accountable in court.”