Event Driven Takeaways
- The companies may extend their transaction until the ALJ releases its scheduling order, which is expected approximately Aug. 23. However, multiple attorneys expressed to Event Driven that the ALJ process could take a year.
- Sinclair and Tribune have a deadline of Aug. 8 or Aug. 9 to file notices of appearance to the FCC administrative law judge, according to a source close to the agency. The merger agreement is set to expire Aug. 8.
- There is no way for Sinclair to remove the transaction from the ALJ proceeding without ending the Tribune acquisition, the source said.
While outside commentators have speculated that Sinclair and Tribune may extend their transaction until the administrative law judge, or ALJ, issues a scheduling order, which is expected approximately Aug. 23, several attorneys cautioned that the ALJ process itself could take a year or more to conclude.
“I don’t think there’s going to be a hearing,” said Peter Tannenwald, a telecommunications attorney at Fletcher, Heald & Hildreth. “Hearings are not practical in a situation like this. Some hearings take years.”
Another telecommunications attorney agreed the proceedings could take a year. “These things tend to drag on,” this attorney said.
A former FCC official said that even though it would be “reasonable” for the parties to extend their merger until the ALJ has issued the scheduling order, Tribune’s incentive is to terminate the transaction. “If I’m Tribune, I walk away with my money,” the former official said. “Presumably they could walk away and sell to Sinclair again.”
Additionally, Sinclair may be required to pay a fine to the FCC because of alleged misrepresentations to the agency. “I think they are going to be in a proceeding for a while, with fines,” the former official said about Sinclair. The company may reach a settlement with the FCC, which the ALJ would then approve.
“Given how ugly this thing has gotten, I don’t think it’s salvageable,” the former official said about the Tribune/Sinclair transaction.
According to a source close to the agency, the companies have until Aug. 8 or Aug. 9 to file notices of appearance with the ALJ. The expected timing could create last-minute dramatics in what has already been a tumultuous road for the two companies.
Sinclair has said it plans to hold an earnings call the morning of Aug. 8, which potentially could occur prior to the date by which the companies would need to file a notice of appearance. Of course, either party could issue an announcement in advance of Aug. 8 regarding the fate of their transaction.
According to the source, there is no way for Sinclair to remove the transaction from the ALJ proceeding without ending the Tribune acquisition. For example, even if the D.C. court issues a ruling in the UHF discount case prior to Aug. 8, the merger will stay with the ALJ. “It’s really in the ALJ court’s hands,” the source said.
Event Driven’s past coverage of this transaction can be found
HERE.
--Ryan Lynch and Alexandra Wilts