August 10, 2017 Last Updated 11:30 am

Sinclair takeover of Tribune Media runs into opposition, but what happens to Tribune should the deal fall apart?

Tribune Media stock was once hit $88 a share, but fell after just a few quarters following its creation after the break-up of The Tribune Company, now it is being sold for $43.50 per share, a 26 percent premium over the price at the time the deal was announced

The deal for Tribune Media’s 42 television stations in 33 markets, along with cable network WGN America and other assets, is still likely to get approval from the FCC. New FCC Chairman Ajit Pai is a big advocate proponent of media consolidation, and oligarchical ownership of the airwaves and Internet. But still, opposition to the deal is growing, and at some point the Trump administration will be left between pleasing the Bannon wing of the administration, or Rupert Murdoch and other more traditional right-wing media moguls.

This puts Tribune Media is a bit of a jam. What happens if the deal, valued at $43.50 to shareholders, collapses because Sinclair cannot convince the old Australian that things will be OK for his Fox channels if the local television market is dominated by one player?

It should be remembered that just one week before Tribune Media announced that it had sold out to Sinclair, the speculation was that 21st Century Fox was looking at a possible deal for Tribune in partnership with the private equity firm Blackstone Group. With the victory of Donald Trump, local television was going to be consolidated one way or another, the only question was whether Murdoch would be involved, or whether Sinclair or Nexstar would make the next move.

Nexstar, you will remember, stopped Meredith from merging with Media General when they convinced shareholders that it would be a better deal to merge with them rather than Meredith due to that company’s print magazine holdings. Nexstar won, and Meredith had to settle for a hefty deal break-up fee as compensation.

Tribune Media stock, which hit $88 a share in 2014, not long after its split from The Tribune Company (with the print side becoming Tribune Publishing, and now Tronc), hit a low of $26.10 last year when it was apparent that the spin-off was one of those few occasions where the broadcast side did not do that much better than the print side of the spin-off.

Enter Sinclair to save the day, driving the stock up to over $40 a share because of their winning bid. But now there are signs that there may be a coalition of media companies opposed to the deal.

Dish Network’s CEO Charlie Ergen has been vocal in his opposition to the deal, and filed a Petition to Dismiss or Deny with the FCC.

“Sinclair has a long record of buying a station, hollowing out its talent, and replacing its locally-produced programming with centrally produced content. A list compiled by DISH details a practice of brutal job and cost cuts at no fewer than 27 Sinclair-owned stations,” said Dish in its FCC filing.

Newsmax founder Christopher Ruddy also filed an objection saying the “level of media concentration proposed by this transaction will homogenize the content available to U.S. consumers, eliminate unique viewpoints and reduce press diversity, especially in the delivery of local news.”

Other conservative media outlets did, as well, including One America News Network and The Blaze.

The problem, as the conservative media outlets see it, is that there are only so many ad dollars out there for right-wing media to land. If Sinclair gets too big, they will be squeezed out. Murdoch’s concern is that Sinclair would own too many Fox affiliates, and so would be in a good position to negotiate with 21st Century Fox.

“The real concern here is: When you have an entity with excessive, unbalanced power in the marketplace, which Sinclair arguably has now, the market doesn’t work,” Charles Herring, whose family company Herring Networks owns One America News Network, told The New York Times.


The question for Tribune Media shareholders is what happens if the deal falls apart?

Yesterday, the company disappointed investors with its second quarter earnings report, with revenue falling 2 percent, and higher programming and retransmission costs leading the company reporting a loss.

Q3 will look better, Tribune Media closed on its sale of its CareerBuilder stake at the end of July, which lead to a cash infusion 158 million (it will also retain an approximate 7% ownership interest).

“While our overall performance was significantly affected by non-recurring expenses and accelerated amortization related to the shift in programming strategy at WGN America, those changes are now behind us, and we expect a much more profitable 2018 with more original hours than the network has ever carried. We continue to aggressively manage expenses across the business,” said Peter Kern, Tribune Media’s Chief Executive Officer.

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