Sinclair Broadcast Near Deal to Buy Tribune for $4 Billion

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 [e-mail]

(END) Dow Jones Newswires

May 07, 2017 16:27 ET (20:27 GMT)

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