Event Driven Takeaways
- Tribune/Sinclair still need the DOJ to tell them which assets to sell before they reach any divestiture agreements with potential buyers.
- In this instance, it is difficult to say whether the DOJ would require an upfront buyer or buyers, a former agency official said. It is possible the DOJ would conditionally allow the deal to proceed without prior approval of the purchaser.
- The DOJ is not expected to signal until Jan 2018 which assets need to be sold.
Tribune and Sinclair do not yet have asset purchase agreements in place and are waiting to hear from the DOJ about which assets need to be sold, Event Driven has learned.
Recent news reports have indicated that DOJ approval of the deal is imminent. However, those reports are “way ahead” of the current antitrust review status, according to a person briefed on the transaction.
Sinclair continues to run a bidding process for divested assets, and asset purchase agreements are not in place, the person said. A specific answer from the DOJ about which assets need to be sold is unlikely before year-end and might not occur until late in January.
Under the terms of their merger agreement, the parties are seeking to close by May 8, 2018, but that date can be extended automatically until Aug. 8, 2018.
Depending on how the DOJ views the transaction, there are different ways the deal could be approved. For example, Tribune/Sinclair could be approved conditionally as long as the merging parties subsequently find suitable buyers for the assets they need to divest. Alternatively, the DOJ might want an upfront review and approval of the buyer or buyers before allowing the deal to proceed.
According to a former DOJ official, the agency sometimes requires an upfront buyer, but not always. It is difficult to say whether the DOJ would require upfront buyers for Tribune and Sinclair, the former official said. “Sometimes the [Antitrust] Division has concerns about whether there's a viable buyer who could effectively compete in a market, and then they’re more likely to want the purchaser identified and evaluated before a divestiture is deemed acceptable.”
The FCC would also need to approve any buyers of divested assets from Tribune/Sinclair. It is expected that the DOJ would act first on approving the Tribune acquisition, and that FCC approval would follow. There is currently no indication that either agency intends to block the deal.
FCC officials continue to meet with outside groups which oppose the transaction. For instance, representatives of the Competitive Carriers Association (CCA) met with the FCC earlier this week. The CCA argues that Tribune/Sinclair would “harm the public interest, delay the post-incentive auction repacking process, and threaten industry competition.”
Earlier this month, BW Telecom sent a letter to the FCC complaining that TV rates for smaller companies would “skyrocket” because of the deal. Cable TV would become “financially burdensome” to customers, BW Telecom’s general manager wrote in the letter.
Today is day 153 of the FCC’s 180-day review timeline.
Event Driven’s coverage of this deal can be found
HERE.
--Ryan Lynch