The fallout from Sinclair’s failed $3.9 billion acquisition of Tribune Media took another turn this week as Sinclair officially fired back at Tribune’s lawsuit.
Earlier this month, Tribune called off the merger and sued Sinclair for breach of contract. The company accused Sinclair of engaging in unnecessarily aggressive and protracted negotiations with the U.S. Justice Department and the FCC over regulatory requirements, refusing to sell stations in the markets as required to obtain approval and proposing aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay.
Sinclair’s planned station divestitures were called into question by FCC Chairman Ajit Pai, who said some of the suggested station buyers were too close to Sinclair and Executive Chairman David Smith.
"In light of the FCC's unanimous decision, referring the issue of Sinclair's conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever," said Tribune Media CEO Peter Kern in a statement at the time. "This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable."
Sinclair has now answered with a counterclaim against Tribune.
“We were extremely disappointed that the Tribune transaction was terminated,” said Sinclair President and CEO Chris Ripley in a statement. “We are likewise disappointed that Tribune, through its meritless lawsuit, is seeking to capitalize on an unfavorable and unexpected reaction from the Federal Communications Commission to capture a windfall for Tribune. Today, we filed our response to Tribune’s complaint, along with a counterclaim against Tribune for breaching the merger agreement. As described in our filing, we fully complied with our obligations under the merger agreement and worked tirelessly to close the transaction. The Company looks forward to vigorously defending against Tribune’s claims and pursuing our own claim.”
Tribune called the counterclaim “meritless” and said Sinclair was trying to distract from its own legal problems.
“As detailed in Tribune's complaint, Sinclair repeatedly and willfully breached its contractual obligations during what should have been a straightforward regulatory review process. Sinclair's misconduct culminated in its submitting to the Federal Communications Commission divestiture proposals that led the Commission to order a hearing on the fundamental issue of Sinclair's lack of candor, thus ending any chance at merger approval in any reasonable timeframe. Tribune looks forward to holding Sinclair accountable in court,” Tribune wrote in a statement.
Tribune’s original lawsuit is seeking $1 billion in damages from Sinclair.