Event Driven Takeaways
- Regulatory review of the transaction is on track, but Sinclair has not yet signed an asset purchase agreement, nor has the company submitted to the FCC an application to transfer licenses to a divestiture buyer.
- The DOJ and FCC divestiture reviews would take place concurrently, with coordination between the agencies. It is expected that the FCC’s review would finish after the DOJ has decided whether the divestitures would sufficiently resolve antitrust concerns.
- Sinclair opposes the DOJ’s market definition. This poses little risk of regulatory backlash while retaining the upside of limiting the overall size of the divestiture package.
Regulatory review of the Tribune/Sinclair deal is on track but has not progressed into a formal examination of any divestiture buyer, Event Driven has learned.
Sinclair has not yet signed an asset purchase agreement for the DOJ and FCC to review, nor has Sinclair submitted to the FCC an application to transfer licenses to a divestiture buyer, according to two people briefed on the transaction. Further, the FCC’s review of the transaction is not expected to conclude by Jan. 17, which marks the end of the 180-day shot clock, said the first person briefed. Although FCC leaders typically prefer to finish a review within the 180-day period, they are under no obligation to do so.
Meanwhile, resolution at the DOJ has likely been slowed by Sinclair’s opposition on market definition. The primary downside of aggressive advocacy on market definition is a delay in the transaction’s closing date. The potential upside is that the merging parties could limit their overall divestitures. As
previously reported, Sinclair has not yet reached an understanding with the DOJ about which exact assets need to be sold.
“It is a common tactic for lawyers defending a proposed acquisition to try to expand the market definition in order to show that they have small market shares,” said Warren Grimes, antitrust specialist and associate dean at Southwestern Law School. “So it is not at all surprising that they would take that point of view.”
Both the DOJ and the FCC would review Tribune/Sinclair’s divestiture package. While the DOJ would look at antitrust issues, the FCC would focus on market penetration and the public interest.
These reviews of the asset purchase agreements are expected to take place concurrently, with coordination between the agencies, said the first person briefed. The FCC would likely make a decision about the divestiture package after the DOJ has acted, in part because the FCC’s scope of review is broader, the same person said.
Today is day 174 of the FCC’s 180-day shot clock.
--Ryan Lynch