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Tribune Media Sold To Sinclair Broadcasting

The day that most Tribune Media employees have been dreading for weeks finally arrived. Chicago-based Tribune Media has agreed to sell all of its properties to Maryland-based Sinclair Broadcasting Group. The sale includes 42 television stations (including WGN-TV in Chicago), shared ownership of digital multicast network Antenna TV, cable network WGN America, Chicago cable station CLTV, nearly a third of ownership of the cable Food Network, Chicago radio station WGN-AM, various digital properties and a minority stake in CareerBuilder.com, and a great deal of real estate properties not yet sold off in Tribune Media's recent realty purge.

Sinclair will be acquiring Tribune Media by purchasing 100% of the company's stock at $43.50 a share -- a 25% premium over what Tribune Media's stock was trading for earlier this year (before takeover rumors brought the stock price higher). The stock purchase will cost Sinclair approximately $3.9 billion. Additionally, Sinclair will absorb $2.7 billion of Tribune Media's net debt, making the total cost for Sinclair's purchase of Tribune Media's properties approximately $6.6 billion.

Sinclair will pay for this using a combination of cash on hand and financed debt.

After the conclusion of this sale, pending federal regulations and approvals, Sinclair could own an amazing 223 television stations in 108 markets, reaching approximately 72% of television households in the country. No other broadcast group in America comes even close to that number.

Sinclair will probably be forced to sell off a few television stations in as little as three smaller markets where it will own too many stations, unless the FCC makes an exception for Sinclair.

Assuming there are no federal approval battles for Sinclair, the deal should close by the end of 2017.

Tribune Media had been in serious talks with Sinclair for at least six months, although Tribune Media frequently denied it was for sale. Other companies that had been looking to purchase Tribune Media in recent months included FOX Television (21st Century Fox), Nexstar, Meredith Corporation, and a consortium of well-known television investors/buyers. In the end, Sinclair pushed the hardest for the sale and won it.

After Tribune Media President and CEO Peter Liguori was forced out from the company in March with no replacement named, it became very clear that the Tribune Media Board of Directors, made up largely of creditors and debtors, were looking to sell the company as quick as possible.

Sinclair has been quite controversial in the past year after the company was exposed to have created a financial relationship with then-candidate Donald Trump to give him more favorable coverage during the Presidential elections. Sinclair newscasts aired overtly negative coverage of Democratic Presidential candidate Hillary Clinton and have since been purposely downplaying any negative coverage of now-President Trump. Sinclair newscasts have been compared to that of the FOX News cable station. In fact, it has been said that Sinclair feels cable giant FOX News is not conservative enough and wishes to be an outlet even farther to the right than FOX News has been over the years.

Sinclair's leadership, which has been a huge supporter of President Trump's, is hoping that close relationship with the current administration will help grease the way to have the Sinclair-Tribune merger easily approved.

What will this merger mean for viewers of the soon-to-be-former Tribune Media/Tribune Broadcasting stations? For starters, look for those stations' newscasts to have much more conservative slanted/biased reports and writing, with conservative commentary added. Longtime veteran newspeople at those stations could be shown the door at the end of their contracts, replaced by younger newspeople willing to follow the Sinclair directives to be more conservative on-air. Sinclair's reputation for running extremely lean budgets will also force out many veterans from their stations, whose longtime contacts will be deemed no longer worth the price by Sinclair management.

Another obvious change will come to cable and satellite viewers in the form of higher monthly bills in the future. With Sinclair owning so many stations nationwide -- more than double any other company -- they can demand higher retransmission fees from the cable and satellite providers, and will now have much more power to force the providers to give in to their demands. The satellite and cable providers will then choose to pass on those higher costs to their subscribers.

Although Sinclair owns four radio stations in the Seattle-Tacoma, WA market, the company has not shown it has any desire to expand its radio network. WGN-AM in Chicago will likely be sold off either before the closing takes place late this year, or soon after the closing. Being that Sinclair's only talk station in Seattle (KVI-AM) is a very low-rated one made up of primarily syndicated, far-right wing, conservative programs, their not owning WGN-AM would be a good thing for Chicago. Ownership that would keep the historic Chicago radio broadcaster politics-free and at least primarily live and local would continue the station's history of ratings successes.

Not yet known are which Tribune Media executives, most of which are still Chicago-based, will become part of the Sinclair family after the closing. It is expected that Sinclair will streamline operations, having mostly its own staffers take over operations of the new Tribune properties.

Tribune Media Chief Executive Officer Peter Kern stated this morning: "Today's announcement is the culmination of an extensive strategic review, which has delivered significant value to our stockholders. Since we announced the strategic review 15 months ago, we have streamlined the business, monetized non-core assets, strengthened our balance sheet, and returned more than $800 million to stockholders -- all of which has resulted in a 50% increase in stockholder value. We are extremely proud to join Sinclair, and we're excited that Tribune stockholders and employees will have the opportunity to participate in the long-term growth of the combined company."

Kern will be hosting a town hall-style meeting for Tribune Media employees tomorrow at noon to help alleviate their many concerns they have about Sinclair's takeover.

Chris Ripley, Sinclair President and CEO, said in this morning's announcement: "This is a transformational acquisition for Sinclair that will open up a myriad of opportunities for the company. The Tribune stations are highly complementary to Sinclair's existing footprint and will create a leading nationwide media platform that includes our country's largest markets. The acquisition will enable Sinclair to build ATSC 3.0 (Next Generation Broadcast Platform) advanced services, scale emerging networks and national sales, and integrate content verticals. The acquisition will also create substantial synergistic value through operating efficiencies, revenue streams, programming strategies and digital platforms."

David Smith, Sinclair Executive Chairman, added: "This will be the largest acquisition in our company's history, and I want to thank everyone from the Sinclair team, as well as our advisors and bankers who made this possible. Television broadcasting is even more relevant today, especially when it comes to serving our local communities. Tribune's stations allow Sinclair to strengthen our commitment to serving local communities and to advance the Next Generation Broadcast Platform. This acquisition will be a turning point for Sinclair, allowing us to better serve our viewers and advertisers while creating value for our shareholders."

Tribune Media, formerly Tribune Company, has been Chicago-based since it began in 1847. When the proposed sale to Sinclair closes later this year, it will truly be an end of an era in Chicago media.


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