August 9, 2018 at 9:06 am #183402
NEW YORK, August 9, 2018 — Tribune Media Company (NYSE: TRCO) (the “Company”) today announced that it has terminated its merger agreement (the “Merger Agreement”) with Sinclair Broadcast Group, Inc. (“Sinclair”), and that it has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract. The lawsuit seeks compensation for all losses incurred as a result of Sinclair’s material breaches of the Merger Agreement. A copy of the lawsuit will be posted on the Tribune Media website, www.tribunemedia.com, as soon as it has been made publicly available by the Court.
In the Merger Agreement, Sinclair committed to use its reasonable best efforts to obtain regulatory approval as promptly as possible, including agreeing in advance to divest stations in certain markets as necessary or advisable for regulatory approval. Instead, in an effort to maintain control over stations it was obligated to sell, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission (the “FCC”) over regulatory requirements, 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—all in derogation of Sinclair’s contractual obligations. Ultimately, 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. As elaborated in the complaint we filed earlier today, Sinclair’s entire course of conduct has been in blatant violation of the Merger Agreement and, but for Sinclair’s actions, the transaction could have closed long ago.
“In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,” said Peter Kern, Tribune Media’s Chief Executive Officer. “This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”
“Notwithstanding our disappointment regarding the outcome of the transaction, we are extremely pleased with our second quarter results, which were very strong. Consolidated Adjusted EBITDA grew 69% versus the prior year period and 84% for the first half of the year. While net core advertising revenues declined 6% and were under pressure broadly, we were able to drive consolidated revenue growth of 6% when excluding the impact of barter revenues, with solid growth in retransmission and carriage fees revenues and political advertising revenue. In addition, our disciplined focus on cost management drove programming expenses down 29% and Corporate and Other cash expenses, excluding transaction costs, down 19% over the prior year period.”
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