In a court filing, Tribune says it “seeks to recover all losses incurred as a results of Sinclair’s misconduct, including but not limited to approximately $1 billion of lost premium and additional damages.”
As part of their quarterly earnings results, Tribune Media said: “Sinclair's entire course of conduct has been in blatant violation of the merger agreement and, but for Sinclair's actions, the transaction could have closed long ago.”
The deal would have given the combined TV station group a massive scale, with potential 70% coverage of U.S. TV homes -- well above the 39% U.S. regulatory limit.
But it was effectively stopped last month when the FCC Chairman Ajit Pai expressed “serious concerns” about the deal. The matter was then referred to an administrative law judge to consider, which analysts said would effectively kill the deal.
Pai stated that as part of the deal, divestiture of certain television stations "would allow Sinclair to control those stations in practice, even if not in name, in violation of the law."
According to Tribune’s complaint, Sinclair pursued a “high risk” approach in selling stations with significant ties to David Smith, executive chairman of Sinclair, and his family.
“Sinclair would effectively control all aspects of operations, including advertising sales, negotiations of retransmission fees to satellite.... Sinclair would continue to reap the lion’s share of the economic benefits of the stations it was purportedly “divesting” and would have an option to repurchase the stations in the future.”
Tribune Media stock was up 2.6% to $34.52; Sinclair was down 2.3% to $26.48.