Tribune Media Sues Sinclair who counter sues

The merger of Chicago-based Tribune Media and Sinclair Broadcast Group ended with a bang when Tribune Media terminated the agreement on August 8th and then sued Sinclair for damages. Variety Magazine posted the lawsuit on their website for anyone interested and gave an excellent summary of behind the scenes events between Tribune Media and Sinclair in their August 9th edition. Several weeks later Sinclair counter sues Tribune Media. Divorce can be so ugly.

A few additional thoughts and concerns:                                                                                                                                                                                  If anyone had bothered to read the public comments submitted to the FCC during the comment period, it was pretty obvious the primary objection was the size of the merged company and its impact on opinion diversity in the industry. Indeed, the proposed merged company would have far exceeded existing FCC limits on national coverage and the first objectors to the merger were small rural cable systems who feared Sinclair/Tribune Media would squeeze them out of cable bundles. Yet as several of the business journals kept pointing out: the size of the merged company based on market capitalization was still miniscule compared to the existing giants of the industry (Comcast, Disney, Viacom CBS and Fox).

The FCC’s Inspector General investigated whether the Trump Administation tried to influence the FCC Chairman and concluded that they did not regardless of any Trump tweets that expressed support for Sinclair. The Chairman’s motivation seems to be a belief that only large companies can afford to make the necessary investments in new technology that are going to be required as television will more resemble the internet. Indeed he has since again expressed his desire to increase FCC ownership limits. Tribune Media is a viable company but it is becoming technologically challenged.

Chicago’s political and civic leadership played no major role in this struggle one way or another. That has been true since the 1930’s when the Federal Government first brought anti-trust suits against NBC which was then undermining Chicago’s radio production industry. Illinois’s Congressmen and Senators were invisible except for Senator Durbin who took an adamant stand against the merger obstinately because the merged company would have been too big, but the suspicion is he didn’t like Sinclair’s conservative orientation.

The Sinclair Tribune Media merger may be dead but the desire of the investors to cash out of Tribune Media is very much alive. What now? Do they sell the company in pieces or look for another merger candidate? In either case, the problem for Chicago remains. The only major television company in Chicago will fall to ownership somewhere else. How can Chicago be “World Class” when it doesn’t control a single major television broadcast outlet in Chicago? The failed merger was a time reprieve to organize and establish what is in Chicago’s self-interest and how to achieve it.