Tribune Media Company has terminated its merger agreement with Sinclair Broadcast Group, and has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract.
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Tribune seeks compensation for all losses incurred as a result of Sinclair's material breaches of the merger agreement. During a conference call Thursday at 8:00 a.m. ET, the company’s executives said that the details of the lawsuit, including the dollar amount, would be released in “one to three hours.” They added that it is a “large number, if you want an idea of the amount, think about the deal premium when the transaction was first announced.”
According to Tribune, Sinclair committed to use reasonable best efforts to obtain regulatory approval as promptly as possible, instead, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission (FCC) over regulatory requirements.
Tribune also said Sinclair refused to sell stations in the markets as required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay.
The FCC concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC's ownership rules and, accordingly, put the merger on indefinite hold while an administrative law judge determines whether Sinclair misled the FCC or acted with a lack of candor.
According to Tribune, Sinclair's entire course of conduct has been in blatant violation of the merger agreement and without Sinclair's actions the transaction could have closed long ago.
Thursday afternoon, Sinclair filed with the FCC to withdraw the merger application. According to Reuters, the company said it intends to defend against Tribune's lawsuit saying that it "fully complied with our obligations under the merger agreement," and that it did not mislead the FCC with respect to the transaction with Tribune.
*This story has been updated.