Sinclair Broadcast Group's failed merger with Tribune Media was not the end of its controversy, but the beginning of mounting issues, including Tribune's $1 billion lawsuit, FCC and Department of Justice investigations, and potential future hurdles to do business, according to The Hill.
"Only now that it falls apart do we see the damage Sinclair was doing to its own ambitions with its approach," Free Press CEO Craig Aaron told the Hill. "Now they're not just politically toxic, they're increasingly toxic to companies that would likely do business with them."
Once the FCC challenged Sinclair's merger and opened investigations, Tribune called off the deal and filed a $1 billion lawsuit against Sinclair, alleging it broke terms of the merger agreement and led to the deal's downfall with its approach to the FCC and Justice Department.
"In exercising its authority under the merger agreement to lead the regulatory approval process, Sinclair repeatedly favored its own financial interests over its contractual obligations by rejecting clear paths to regulatory approval," Tribune claimed in the lawsuit. "Instead, Sinclair fought, threatened, insulted, and misled regulators in a misguided and ultimately unsuccessful attempt to retain control over stations that it was obligated to sell."
Sinclair may now face questions whether it is fit to hold its broadcasting license, according to former FCC chief of staff and analyst at New Street Research Blair Levin.
"Theoretically, you could say they not only aren't qualified to buy new licenses, they're not qualified to own licenses," Levin told the Hill. "I don't think the FCC will go that far, but that's in play. It's on the table."
Outside of the Tribune lawsuit and FCC issues, Sinclair is under DOJ investigation on whether it might have colluded to artificially raise advertising rates.
"There's going to be a wave of [media] consolidation, and it's not clear to me that Sinclair will be able to participate," Levin added.
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