Sinclair, Tribune Media Near Deal -- WSJ
May 08 2017 - 3:02AM
Dow Jones News
By Joe Flint
TV station giant Sinclair Broadcast Group Inc. is close to a
deal to acquire Tribune Media Co. for close to $4 billion, a person
familiar with the matter said.
The agreement, which could be announced as early as this week,
would combine two of the nation's biggest operators of local
television stations and comes just weeks after the Federal
Communications Commission relaxed its television ownership rules,
paving the way for more deals in the industry.
For Sinclair, an acquisition of Tribune would cement its status
as the most powerful U.S. station owner. It already has 173
television stations in midsize and small markets. The addition of
Tribune's 42 stations would give Sinclair outlets in just about
every major market as well, including New York, Los Angeles and
Chicago.
The companies are negotiating a deal that would value Tribune
Media at $44 to $45 a share, the person familiar with the matter
said. Tribune shares closed Friday at $40.29.
Even with the new relaxed TV ownership rules, it is likely that
Sinclair will have to sell off some of its or Tribune's stations to
comply with the FCC's rules limiting a company to ownership of TV
stations that reach 39% of the country. A combination of the two
companies would have a 50% reach.
Besides the Tribune TV stations, the deal also includes the
cable channel WGN America. Sinclair would also likely end up with
Tribune's minority stake in the Food Network, which is majority
owned by Scripps Networks Interactive Inc. For Sinclair, the
motivation to get bigger is being driven, in part, by its desire to
expand into both cable programming and the wireless business,
people close to the company said.
Sinclair owns the Tennis Channel and has expressed a desire to
move further into cable. By owning more local TV stations, Sinclair
would have increased leverage to negotiate distribution agreements
with pay-TV distributors.
The company also wants to use its broadcast airwaves to offer
content to mobile devices, and owning stations in major markets
will be crucial for such an effort.
A Sinclair spokesperson couldn't be reached for comment. Reuters
earlier reported that the companies were nearing a deal.
Although a three-way bidding war had been expected for Tribune,
one of the interested parties, 21st Century Fox Inc., ended its
pursuit of the company, a person familiar with the situation
said.
Fox initially teamed up with the private-equity firm Blackstone
Group to make a run for Tribune, people familiar with the situation
said, because it was wary of Sinclair owning so many local stations
affiliated with the Fox network.
Last Wednesday, Fox Networks Group Chief Executive Peter Rice
expressed the company's desire to own Tribune while on a panel at
the Milken Conference in Los Angeles because it was important for
Fox to have "control of distribution" and a "broader
footprint."
21st Century Fox and Wall Street Journal parent News Corp. share
common ownership.
Nexstar Media Group Inc., also a large owner of local television
stations, was pursuing Tribune as well.
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
May 08, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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