In May 2017, Sinclair (SBGI) announced a deal to acquire Tribune (TRCO) for $43.50 per share ($35 per share in cash and 0.23 shares of SBGI per share of TRCO). SBGI anticipated the deal would close in Q4 2017, but subsequently pushed the timeline back multiple times. Last month, we found out all the delays were due to SBGI taking an extraordinarily aggressive posture towards the deal structure, specifically regarding required divestitures. Instead of approving the deal, the FCC chose the rare course of referring the deal to an administrative law judge, or ALJ. (You can read the hearing designation order, or HDO, here.) Historically, referral to an ALJ has been tantamount to killing the deal.
This action by the FCC was shocking, as Ajit Pai is perhaps the most deregulatory (and therefore broadcast-friendly) FCC chair in recent history. But as the HDO details, SBGI, in its hubris, believed it could steamroll its regulator and set a new precedent in TV station consolidation. It was defiant right up until the end, and that was its undoing. The deal could have closed months ago if SBGI had just followed the same course it, and so many of its peers, had done for past deals.
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