continuing coverage Sinclair and Tribune Part 2: The Redux

[DonDonP1 118]

Is it possible that the FCC approves the Standard Media and Fox deals but rejects Sinclair-Tribune altogether?

 

Because if Pai only has concerns about the sidecar deals Sinclair made and not the deals to unaffiliated third parties (Standard and Fox) I would have to think that Standard and Fox deals get approved and consummated regardless if the Tribune deal falls apart or not

 

It is possible. Come on, Fox, you can do it.

[T.L. Hughes 890]

Yes, if in the unlikely event the Sinclair-Tribune deal collapses, then the spinoffs collapse too. Afterward, it's game on, and as mentioned above, R.I.P. Speculatron.

Unless, should else someone acquire most of the Tribune assets, they agree to honor the spinoff sales to Standard and Fox, but only involving the Tribune outlets marked for sale. However, in that scenario, it would be more to get the purchaser under the 39% cap, whereas all of the spinoffs in this deal were made to address various issues (from ownership conflicts to Fox's concern that Sinclair could have owned about 52 Fox stations with enough market reach to give Sinclair retrans leverage).

[TheRob 938]

Interesting update from Reuters:

 

https://www.reuters.com/article/us-tribune-m-a-sinclair-order-exclusive/exclusive-u-s-fcc-order-says-sinclair-request-on-tribune-may-involve-deception-idUSKBN1K62B8

[ColtFromGulfcoast 709]

Interesting update from Reuters:

 

https://www.reuters.com/article/us-tribune-m-a-sinclair-order-exclusive/exclusive-u-s-fcc-order-says-sinclair-request-on-tribune-may-involve-deception-idUSKBN1K62B8

 

You don't say!?

[dman748 1256]

Unless, should else someone acquire most of the Tribune assets, they agree to honor the spinoff sales to Standard and Fox, but only involving the Tribune outlets marked for sale. However, in that scenario, it would be more to get the purchaser under the 39% cap, whereas all of the spinoffs in this deal were made to address various issues (from ownership conflicts to Fox's concern that Sinclair could have owned about 52 Fox stations with enough market reach to give Sinclair retrans leverage).

Now I'm confused because TheRob and TVNewsLover just got through telling me that the Standard/Fox deals collapse if the Sinclair/Tribune deal collapses now I see that Sinclair has to honor the Standard and Fox deals as it was orgininally written.

 

Someone please clear up the confusion once and for all, thank you

[cna247 174]

Now I'm confused because TheRob and TVNewsLover just got through telling me that the Standard/Fox deals collapse if the Sinclair/Tribune deal collapses now I see that Sinclair has to honor the Standard and Fox deals as it was orgininally written.

 

Someone please clear up the confusion once and for all, thank you

T. L. said UNLESS someone else acquires the Tribune stations and this new acquirer could make the same deals to Fox and Standard Media, but there is no obligation to do so. Try using your brain a bit.

[cg41386 132]

Now I'm confused because TheRob and TVNewsLover just got through telling me that the Standard/Fox deals collapse if the Sinclair/Tribune deal collapses now I see that Sinclair has to honor the Standard and Fox deals as it was orgininally written.

 

Someone please clear up the confusion once and for all, thank you

 

The spinoffs could occur if another group acquires most of the Tribune stations and decides to honor the spinoff deal that would've happened if the Sinclair deal went through.

[dman748 1256]

The spinoffs could occur if another group acquires most of the Tribune stations and decides to honor the spinoff deal that would've happened if the Sinclair deal went through.

Thank you, that's all I needed to know

[Samantha 2896]

I wouldn't necessarily say "unlikely" because in the past when the FCC has taken mergers like Sinclair/Tribune to an administrative judge, the companies ultimately ended up calling off the deal

 

Sinclair is a company that has pushed FCC deal revisions to their limits in the past. From my experience as a petitioner in the Allbritton acquisition, they pushed the envelope several times.

 

It would appear SBGI's greed has gone too far this time.

 

There seems to be a confluence of factors. A finding of "deception", as the Reuters report states, is highly unusual, particularly from this FCC, and I suspect it is not Cunningham but WGN-TV LLC that is attracting attention. The UHF discount ruling is around the corner. The end date is weeks away, on August 8. The deal still lacks final approval from Justice.

 

I imagine Starboard Value and other activist investors were not expecting this to be such a long and drawn-out process, even by the comparatively glacial pace of this industry. They will have taken a beating. Factoring in today's steep drop, Tribune is down 28 percent off its high for the year from back in January.

 

A sale process this protracted, lasting 14+ months, must be a morale killer at the Tribune stations. The similarly protracted KTVK Belo-Sander-Meredith sale series hurt morale and increased staff turnover.

[T.L. Hughes 890]

The spinoffs could occur if another group acquires most of the Tribune stations and decides to honor the spinoff deal that would've happened if the Sinclair deal went through.

That's what I was explaining, though again, such a move would clearly exclude Sinclair-owned-or-operated stations (like KOKH, WXLV and WOLF/WSWB/WQMY) as Sinclair would have no need to get rid of those if the spinoff arrangements were honored by another group that buys most of Tribune. Those spinoffs had to do with getting Sinclair in compliance with local ownership rules, though if an existing major station group (like Nexstar, Tegna, etc.) were to buy Tribune assets, there's the probability that they would have to contribute stations to an honored deal to address what ownership conflicts may arise in markets where Tribune and its prospective acquirer both own stations.

 

Say, Nexstar grabbed those properties (assuming something doesn't arise with the Apollo buyout offer), one such conflict it would need to address would be that between WTTV(/WTTK)/WXIN and WISH/WNDY, which in that case would warrant two buyers, since Nexstar not only wouldn't be able to keep WISH but would also have to divest either WTTV/WTTK or WXIN since both fall within the top-4 viewership restriction under the duopoly rules (as Sinclair basically disclosed in the amendment proposal to the Tribune deal it submitted in March).

[Rusty Muck 4378]

Interesting update from Reuters:

 

https://www.reuters.com/article/us-tribune-m-a-sinclair-order-exclusive/exclusive-u-s-fcc-order-says-sinclair-request-on-tribune-may-involve-deception-idUSKBN1K62B8

Well then.

 

So is Pai going to recuse himself? Considering he met with David Smith shortly before being appointed lead commissioner, he either does that or legally changes his middle name to "conflict of interest."

 

But let's also put it this way. If even Paid Off publicly calls Sinclair's behavior as deceptive, then that means Brendan Carr and Mike O'Reilly sure as hell see it as deceptive.

 

It is very probable that this merger will die with a unanimous rejection by this FCC, which is something I never thought I would say on here.

[NEOMatrix 1299]

Well then.

 

So is Pai going to recuse himself? Considering he met with David Smith shortly before being appointed lead commissioner, he either does that or legally changes his middle name to "conflict of interest."

Ajit "Conflict of Interest" Paid Off. Sounds legit:p.

 

If you're a Tribune station, I wouldn't celebrate yet because once Tribune coughs up the breakup fee, get ready for massive layoffs and buyouts at plenty of stations.

[bhratbrat 437]

Would Tribune still have to pay the break-off fee if it is something outside of Tribune's control (i.e. the government not allowing this merger to pass).

 

I guess the bigger question was made the FCC put this deal on a slow boat..KPLR and/or from the Reuters article taking about WGN as well.

[Rusty Muck 4378]

Ajit "Conflict of Interest" Paid Off. Sounds legit:p.

 

If you're a Tribune station, I wouldn't celebrate yet because once Tribune coughs up the breakup fee, get ready for massive layoffs and buyouts at plenty of stations.

Oh this is going to be absolutely devastating to those stations. Some of them got off easy, but with Starboard Value having to cough up $150M to Sinclair next month, we could be looking at a series of Clear Channel-type mass firings (and those CC layoff disasters in 2009 happened at the behest of... another private equity firm, Bain Capital! Who knew??)

[Rusty Muck 4378]

Would Tribune still have to pay the break-off fee if it is something outside of Tribune's control (i.e. the government not allowing this merger to pass).

 

I guess the bigger question was made the FCC put this deal on a slow boat..KPLR and/or from the Reuters article taking about WGN as well.

What would the terms of the breakup fee be? My impression was that it would have to be paid, no matter what.

 

If they had no exceptions whatsoever in the event of a dumpster fire of this magnitude, that would be a new level of criminal stupidity and corporate malfeasance on Tribune's (and Starboard Value's) part.

[Guest]

Well the darkest days are still ahead, as this reporter looks on at the Tribune-Sinclair deal as being far from finished.

 

But in all seriousness, who expected this thing to actually pass since it had been delayed and held off for so long? What astonishes me is that Pai seems to be calling out Sinclair for deception in their filing, when clearly I thought he was on their side.

 

Either way, Tribune will be sold off soon or broken up. To whom? Time will tell. I think should it fall through, it will only make Tribune more desirable for other targets. Clearly Tribune was vulnerable to even consider a buyout from Sinclair, now they'll be even more vulnerable. I HIGHLY DOUBT that the company will be sold off in one piece.

[Rusty Muck 4378]

But in all seriousness, who expected this thing to actually pass since it had been delayed and held off for so long? What astonishes me is that Pai seems to be calling out Sinclair for deception in their filing, when clearly I thought he was on their side.

I'm looking at it this way:

 

If someone like Paid Off, who has always been pro-Sinclair, is now suggesting that they engaged in deceptive tactics, then there's a high probability that Brendan Carr and Mike O'Reilly now firmly believe as such and have made it known of their opposition.

 

He's only one vote out of five. Last thing someone like him would want to be is the lone affirmative vote as it goes down in flames.

[elfuego35 90]

Here is a link for the terms of the agreement. (section 9 covers the breakup fee)

 

And here is a link that mentioned that if it isn't approved by the 8/8 deadline, then Tribune doesn't have to pay the breakup fee.

 

Note, I'm not a lawyer, but my interpretation is that if the deal is terminated b/c of governmental order, then Tribune doesn't have to pay the fee, unless if Sinclair terminates the deal prior to the FCC denies... which knowing them, they will...

 

If Tribune doesn't have to pay the fee, AND is willing to honor the Fox portion of the deal, then they will get much needed cash infusion.

[dman748 1256]

Sinclair is a company that has pushed FCC deal revisions to their limits in the past. From my experience as a petitioner in the Allbritton acquisition, they pushed the envelope several times.

 

It would appear SBGI's greed has gone too far this time.

 

There seems to be a confluence of factors. A finding of "deception", as the Reuters report states, is highly unusual, particularly from this FCC, and I suspect it is not Cunningham but WGN-TV LLC that is attracting attention. The UHF discount ruling is around the corner. The end date is weeks away, on August 8. The deal still lacks final approval from Justice.

 

I imagine Starboard Value and other activist investors were not expecting this to be such a long and drawn-out process, even by the comparatively glacial pace of this industry. They will have taken a beating. Factoring in today's steep drop, Tribune is down 28 percent off its high for the year from back in January.

 

A sale process this protracted, lasting 14+ months, must be a morale killer at the Tribune stations. The similarly protracted KTVK Belo-Sander-Meredith sale series hurt morale and increased staff turnover.

I think Pai was targeting the Cunningham and Howard Stirk spin-offs as well, as for the spin-off to WGN-TV, L.L.C. creating issues at the FCC, it doesn't surprise me one bit

[ABC 7 Denver 1717]

Here is a link for the terms of the agreement. (section 9 covers the breakup fee)

 

And here is a link that mentioned that if it isn't approved by the 8/8 deadline, then Tribune doesn't have to pay the breakup fee.

 

Note, I'm not a lawyer, but my interpretation is that if the deal is terminated b/c of governmental order, then Tribune doesn't have to pay the fee, unless if Sinclair terminates the deal prior to the FCC denies... which knowing them, they will...

 

If Tribune doesn't have to pay the fee, AND is willing to honor the Fox portion of the deal, then they will get much needed cash infusion.

 

Yes. That was my interpretation too. I think the Fox deal will go through, and in-fact, include the sister stations in the duopoly markets now, in addition, such that Fox acquires KWGN and KDVR in Denver, e.g.

[broadcastfan9751 140]

Section 11 of the APA between Fox, Tribune and Sinclair says that the agreement may be terminated if the Merger Agreement terminates.

[NowBergen 685]

If I were cynical enough, I'd say that Sinclair can't find a buyer for KPLR as a standalone (and they're too stubborn to sell off KTVI and KPLR, leaving them with just KDNL) and they're hoping Paid Off can basically get them out of an unwinnable situation by now showing some sort of "serious concern." Yeah, right.

 

Remember, if this merger collapses, Sinclair still wins anyway because they'll get the sizable breakup fee from Tribune next month. Plus if Starboard elects to blow up Tribune and sell piecemeal, there's a good chance Sinclair will still get some prized stations out of this, possibly still the coveted trio of WGN, WPIX and KTLA.

 

Something is up, big time.

 

That depends on the court ruling on the reinstatement of the UHF discount. Pai may also be reading the tea leaves from that, as the ruling is expected any day now.

[Samantha 2896]

I'm looking at it this way:

 

If someone like Paid Off, who has always been pro-Sinclair, is now suggesting that they engaged in deceptive tactics, then there's a high probability that Brendan Carr and Mike O'Reilly now firmly believe as such and have made it known of their opposition.

 

He's only one vote out of five. Last thing someone like him would want to be is the lone affirmative vote as it goes down in flames.

 

Worth noting the FCC is currently operating with four commissioners in the wake of Mignon Clyburn's retirement. Rosenworcel and Pai are enough to force the FCC into a tie.

 

In re the termination portion of the Merger Agreement, some notes.

 

Here's the relevant excerpt about termination in light of a final government order:

 

(ii) if there shall have been issued an Order by a Governmental Authority of competent jurisdiction permanently prohibiting the consummation of the Merger and such Order shall have become final and non-appealable; provided that the Party seeking to terminate this Agreement under this Section 9.1(b)(ii) shall have used its reasonable best efforts to have such Order lifted; or

 

A final, non-appealable order is not likely soon.

 

Sinclair also does not need to pay the $135.5 million termination fee if failure to consummate by the End Date and resulting termination of the Merger Agreement is the cause:

 

In addition to the foregoing termination rights, either party may terminate the Merger Agreement if the Merger is not consummated on or before an end date of May 8, 2018, with an automatic extension to August 8, 2018, if necessary to obtain regulatory approval under circumstances specified in the Merger Agreement.

[Rusty Muck 4378]

That depends on the court ruling on the reinstatement of the UHF discount. Pai may also be reading the tea leaves from that, as the ruling is expected any day now.

Definitely smells like an "all of the above" conflagration.

[TSSZNews 1051]

Remember, if this merger collapses, Sinclair still wins anyway because they'll get the sizable breakup fee from Tribune next month. Plus if Starboard elects to blow up Tribune and sell piecemeal, there's a good chance Sinclair will still get some prized stations out of this, possibly still the coveted trio of WGN, WPIX and KTLA.

 

In a single day (today), Sinclair lost more than the value of its breakup fee with Trib in market cap, and it will probably keep shedding - to say nothing of what's going to happen to Tribune.

 

I think the FCC is reading the tea leaves of the DOJ's appeal of the AT&T / Time Warner decision and saddling up. I'm beginning to wonder whether anything of this scale goes through until that's settled--including Disney / FOX.

 

Gray / Raycom could be the only ones to squeak by, and I bet that would get Sinclair fuming.