New York: Sinclair Broadcast Group Inc. is buying Tribune Media Co. for about $3.9bn, a deal made possible after the US Federal Communications Commission voted last month to ease a limit on TV-station ownership in the US
Sinclair will pay $43.50 a share to gain Tribune TV stations in big media markets like New York, Chicago and Miami, strengthening its hand in negotiations with pay-TV distributors and major broadcast networks like 21st Century Fox Inc.
The marriage of Sinclair and Tribune, two of the largest local TV station owners in the US, creates a US broadcasting behemoth to face down online competitors vying for a piece of the local advertising pie. The deal, expected to be the first in a mergers-and-acquisitions frenzy following an historic airwave auction, sent the shares of Tribune surging as high $43.04 in New York.
Fox and Nexstar had also been looking to make the first splash in the broadcasting deals derby by acquiring Tribune.
A Sinclair-Tribune merger was made easier last month when the FCC restored a rule that allows TV station groups to count just half of their coverage area for Ultra High Frequency stations to comply with a 39 percent nationwide cap set by Congress. Under the deal, Tribune stockholders will get $35 in cash and 0.23 share of Sinclair stock for each share of Tribune. The total per-share price represents a premium of 26 percent over Tribune’s closing share price on February 28, the day before reports began surfacing about a possible tie-up. Sinclair will also assume debt of $2.7bn.
Sinclair will finance the deal with cash and debt financing provided by JPMorgan Chase Bank, N.A., Royal Bank of Canada, Deutsche Bank AG New York Branch and Deutsche Bank Securities Inc. and by accessing the capital markets.
