Tribune Media: Moving On

Not surprisingly, Tribune Media walked away from its $3.9 billion merger agreement with Sinclair Broadcast Group.  During the company’s earnings call on Thursday, Tribune’s CEO, Peter Kern, stated that “In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever.  This uncertainty and delay would be detrimental to our company and our shareholders.” 

This means that Tribune is moving on and moving on means that the firm is back on the market and ready to make a deal.  The question is with whom?  Gray and Raycom are off the market with their pending $3.6 billion deal.  The second largest TV station owner, Nexstar, with 171 stations in 100 markets is a real possibility because adding Tribune’s 42 stations in 33 markets, most of them in the thirty-five largest DMAs, increases its national reach and scale.  The “feel” of this deal is very similar to the Sinclair-Tribune merger and would require some asset sales prior to gaining regulatory approval. 

Another possible suitor is TEGNA which owns 47 stations in 39 DMAs and is the largest owner of big four (ABC, CBS, FOX, and NBC) network affiliates in the top 25 markets.  With this possible merger, economic efficiencies would come more from economies of scale and scope, sharing resources (e.g. local news production, syndicated programming) across multiple products (stations) and markets.  In review of the merger, however, the FCC would apply the 8-voice test which would allow a firm to own two TV stations in the same DMA market as long as eight independently-owned, full-powered, stations remained after the purchase and at least one of the stations is not ranked among the top four stations in the DMA (based on audience share).  Consequently, sale of some stations would be necessary to win regulatory approval.  Ready and willing buyers in the wings might well be both FOX and CBS.

		TRIBUNE	CBS		FOX		TEGNA
Largest 35 DMAs	No of full power TV Stations	Primary Network Affiliations	Main	Other	Main	Other	Primary Network Affiliations
New York	23	CW	x	IND	x	MY
Los Angeles	27	CW	x	IND	x	MY
Chicago	16	IND	x		x	MY/CW
Philadelphia	21	MY	x	CW	x	---
Dallas	18	CW	x	IND	x	MY
Washington	16	CW	---	---	x	MY	CBS
Houston	17	CW	---	---	x	MY	CBS
San Francisco	23	---	x	CW	x	MY
Atlanta	14	---	---	CW	x	---	NBC/MY
Boston	18	---	x	MY	---	---
Phoenix	13	---	---	---	x	MY	NBC
Seattle	16	FOX / MY	---	CW	---	---	NBC/IND
Tampa	14	---	---	CW	x	---	CBS
Detroit	9	---	x	CW	x	---
Minneapolis	10	---	x		x	MY
Miami	16	CW	x	MY	---	---
Denver	16	FOX / CW	x	---	---	---	NBC/MY
Cleveland	12	FOX	---	---	---	---	NBC
Sacramento	11	FOX	x	CW	---	---	ABC
St. Louis	8	FOX / CW	---	---	---	---
Portland	9	CW	---	---	---	---	NBC
Pittsburgh	9	---	x	CW	---	---
Baltimore	8	---	x	---	---	---
Indianapolis	14	FOX / CBS		IND	---	---
San Diego	10	FOX	---	---	---	---	CBS