Sinclair Broadcast Group is buying Tribune Media for about $3.9bn, it was announced today (8 May).
The deal was made possible, Bloomberg reports, after the Federal Communications Commission (FCC) voted last month to ease a limit on TV-station ownership in the US.
The purchase will bring together America’s largest TV network, Sinclair Broadcast Group, which beat 21st Century Fox to land the deal. Sinclair already has 173 local news stations, while Tribune has 42. Their combined operations will create the largest-single group of local TV stations in the country.
In 2014 Tribune spun off its newspaper businesses, including the Chicago Tribune and the Los Angeles Times into a new company called Tronc.
Sinclair will pay $43.50 a share for the Chicago-based broadcasting company. It will also assume debt of $2.7bn.
The acquisition of Tribune gives Sinclair TV stations strength in big media markets like New York, Chicago and Miami.
Shares of Tribune rose as high as $43.80 in early New York trading Monday before the announcement. The company’s closing price on Friday was $40.29, giving it a market value of $3.5bn.
21st Century Fox, with funding from Blackstone Group LP, had been planning an offer for Tribune but in the end didn’t submit a bid, said Bloomberg, citing a person familiar with the matter. Nexstar Media Group also was said to be preparing an offer.
The marriage of two of the largest local TV station owners in the US was made easier last month when the FCC restored a rule that allows TV station groups to count just half of their coverage area for Ultra High Frequency stations to comply with a 39% nationwide cap set by Congress.
The FCC’s vote reversed a 2016 decision by the agency during the Obama administration. New Chairman Ajit Pai, a Republican, criticized the earlier action because it effectively tightened ownership limits without considering whether to raise the national cap.
Despite their respective size, Sinclair and Tribune have little overlap in the locations of their stations. Sinclair has 173 stations in 81 markets, including affiliations with Fox, ABC, CBS and NBC, and reaches 24 percent of U.S. TV homes with the UHF discount reinstated.
Tribune has 42 stations reaching 26 percent.They cover 42 percent of the country, implying a likelihood of some divestitures, according to a Bloomberg Intelligence analysis.
With the deal Sinclair, also, gets Tribune’s minority stakes in the Food Network and its flagship cable network WGN America.
Tribune has tried to attract viewers and advertisers to WGN America with original programs like Salem and Outsiders – and it’s worked. But higher programming costs have squeezed Tribune’s profit margin, said Bloomberg.