Sinclair Broadcasting (SBGI) on Monday said it had secured a deal to acquire Tribune Media (TRCO) in a transaction that would catapult the owner of the largest number of local TV stations into a segment of the business it has never entered: big cities. The company will pay about $43.50 for each Tribune share, or about $3.9 billion, and will assume about $2.7 billion in Tribune net debt.
Fox News owner 21st Century Fox and a NY investment firm were recently in talks to buy Tribune, seeking to acquire Tribune-owned local TV stations including WGN in Chicago and PIX 11 in NY.
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 its new holdings, Sinclair would hold stations in seven of the biggest 10 markets. The Chicago-based media company also owns part of the Food Network. The deal is expected to close in the fourth quarter.
Tribune Media said in a statement that it expects Federal Communications Commission's rules on ownership and antitrust regulations may result in Sinclair selling some stations.
At time of writing this, Sinclair Broadcast shares are trading down 2.44 percent while Tribune Media is trading up 5.29 percent. Adding Tribune's stations will also expand Sinclair's reach into major cities where it didn't have a presence before, such as NY and Chicago. Tribune shareholders will receive $35 in cash and 0.23 shares of Sinclair Class A common stock for each share of Tribune Class A common stock and Class B common stock.
Tribune Media Co. announced Monday it has agreed to be acquired by Sinclair Broadcast Group for about $3.9 billion. Sinclair is also in the process of buying Bonten Media Group, which owns 14 stations, for $240 million.
Sinclair is already the largest single owner of local TV stations across the country. In exchange for greater access to the campaign, Sinclair's channels would reportedly air Trump interviews without commentary.
Shares of Tribune rose as high as $43.80 in early NY trading Monday before the announcement.
David Smith, executive chairman of Sinclair, said this will be the largest acquisition in the company's history.
Sinclair has promoted conservative leaning programming and there is speculation the company might use its acquisition of the Tribune Media properties as a springboard to create a national network of its own to challenge Fox News.