Sinclair Broadcast Group is poised to become the nation's most powerful local TV broadcaster with its announcement this morning of an agreement to buy Tribune Media for $3.9 billion in cash and stock, plus the assumption of $2.7 billion in debt. The $43.50 per share offer represents a 26 percent premium to the closing share price for Tribune on February 28, when media speculation about a possible transaction first gathered pace. Sinclair reached a deal to acquire Tribune Media, adding dozens of local stations to its line-up as well as superstation WGN's cable reach.
The Tribune-Sinclair deal, which must be approved by the Federal Communications Commission, would give Sinclair a presence in the top three TV markets - KTLA in Los Angeles, WPIX in NY and WGN in Chicago. Earlier this year, Sinclair formed a wireless initiative with Nexstar Media Group, another large broadcaster, and between the two of them they have airwaves reaching 86% of the country. Representatives declined to comment.
Tribune shares closed at $40.29 on Friday, giving it a market cap of $3.5 billion. That includes 14 Fox Network affiliates, 12 CW affiliates, and several affiliates of the other major networks.More news: North Korea claims Central Intelligence Agency plotted to kill Kim Jong
FCC Chairman Ajit Pai, named by President Donald Trump in January, is planning to take a new look at the current overall limit on companies owning stations serving no more than 39 percent of US television households. With the addition of Tribune stations, Sinclair would reach 72% of US households, according to president and CEO Chris Ripley.
Sinclair also gets cable network WGN America and a stake in the Food Network, a joint venture between Tribune and Scripps Network Interactive Inc SNI.O . "The acquisition will also create substantial synergistic value through operating efficiencies, revenue streams, programming strategies and digital platforms". Shares of Sinclair were inactive in premarket trade, but have gained almost 11% in the year to date, while Tribune is up more than 15%.
There is also a possibility that there could be more than one bidding company on Tribune Media and that could lead to price war between one or more companies. Completion of the transaction is subject to approval by Tribune's stockholders, as well as customary closing conditions, including approval by the Federal Communications Commission (FCC), and antitrust clearance.More news: 13 judges to hear revised Trump travel ban case
The latest move assumed significance since it comes on the heels of Twenty-First Century held a discussions with Blackstone Group on submitting a proposal to buy Tribune Media last week.
Wells Fargo analyst Marci Ryvicker said that today's deal was done at a "very attractive" multiple and is "clearly accretive" to free cash flow.More news: Cop Charged with Murder after Killing 15 Year Old Jordan Edwards
- Cavs take 3-0 lead; Spurs up
- Tyson Fury eyes return to the ring in July
- Mark Selby fights back but John Higgins still leads overnight
- Atkins: Senate GOP feeling heat over Obamacare repeal
- Seacrest Says He's Unlikely to Host Rebooted 'Idol'
- What Alvarez-Golovkin being set means for Mayweather-McGregor
- Nubia brings M2 Lite to India for Rs 13999
- China's First Civilian Airliner - And Industry Ambitions - Take Maiden Flight
- Ryan Seacrest is Kelly Ripa's new co-host on 'Live'
- Punjab keep playoff hopes alive with win over RCB