Two local TV stations changing owners as part of $3.9B media deal

Telecommunications company Sinclair Broadcast Group is buying rival Tribune Media Co. for about $3.9 billion in a deal between the nation's two largest TV station owners. The acquisition was announced Monday morning.

Chicago-based Tribune owns Indianapolis-based stations WTTV-Channel 4 and WXIN-TV Channel 59. WTTV is the city's CBS affiliate and WXIN is the local Fox affiliate.

Sinclair will own or operate more than 200 stations nationally following the deal. Tribune owns or operates 42 television stations in 33 markets, including KTLA in Los Angeles, WPIX in New York and WGN in Chicago. It also owns a stake in the Food Network.

Sinclair, based in Hunt Valley, Maryland, owns 173 stations around the country. It will pay $43.50 for each share of Tribune Media, an 8 percent premium from Tribune's closing price of $40.29 on Friday.

Sinclair also will assume approximately $2.7 billion in debt.

Fox News owner 21st Century Fox and a New York investment firm have been in talks to buy Tribune, as have 21st Century Fox, Nexstar Media Group Inc. and Blackstone Group, Bloomberg News reported Sunday.

Sinclair's move on Tribune appears to have been sparked by potential rule changes under a federal regulator recently appointed by President Donald Trump. Reports of a possible Sinclair bid emerged about a month after proposals to dial back regulations that kept a lid on such deals were floated by Ajit Pai, the new chairman of the Federal Communications Commission.

Tribune's station holdings consist of 14 Fox, 12 CW, six CBS, three ABC, two NBC and three MyNetworkTV affiliates, plus two independent stations.

Sinclair might have to sell stations in markets where it currently owns stations, in order to comply with antitrust regulations. It does not currently have any properties in Indianapolis.

“This is a transformational acquisition for Sinclair that will open up a myriad of opportunities for the company,” said Sinclair CEO Chris Ripley in written comments. "The Tribune stations are highly complementary to Sinclair’s existing footprint and will create a leading nationwide media platform that includes our country’s largest markets.

For Fox, the deal means Sinclair will have more bargaining power with control of 28 percent of the nation’s Fox affiliate stations. Sinclair owns 54 local Fox affiliates across the country, from Pittsburgh’s WPGH to Oklahoma City’s KOKH. Gaining the Fox stations owned by Tribune, including Seattle’s KCPQ and Denver’s KDVR, would extend Sinclair’s lead as the largest owner of local Fox stations across the U.S.

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.

The FCC’s vote reversed a 2016 decision by the agency during the Obama administration. New Chairman Ajit Pai, a Republican, criticized the earlier action because it effectively tightened ownership limits without considering whether to raise the national cap.

The issue is a relic of days when UHF stations, broadcasting on channels 14 and higher, used signals that didn’t reach as far as stations assigned lower-numbered channels. That disappeared with the switch to digital TV in 2009.

The impetus for a Sinclair-Tribune deal came earlier this year when the FCC eased confidentiality requirements for companies selling airwaves in an auction. TV stations are voluntarily giving up airwaves in the sale for use by mobile providers, and are getting paid for doing so.

Sinclair stock was up 1.8 percent Monday morning, to $37.65 per share. Tribune stock rose 6 percent, to $42.72 per share.