Tribune Media Company
- Company Name
- Tribune Media Company
- Stock Symbol
- Class Period
- November 29, 2017 to July 16, 2018
- Motion Deadline
- November 10, 2018
- Northern District of Illinois
The complaint charges Tribune and certain of its officers with violations of the Securities Exchange Act of 1934. Tribune is one of the country’s largest television broadcasting companies, with 39 television stations across the United States and three additional stations operated through local marketing agreements. On May 8, 2017, Tribune announced that it had entered into a merger agreement with Sinclair Broadcast Group Inc. (“Sinclair”), pursuant to which Sinclair would acquire Tribune’s outstanding stock and Tribune shareholders would receive cash and Sinclair stock for a total value of $43.50 per share in a transaction valued at $3.9 billion (the “Merger”). The market reacted favorably to the news of the Merger, with the price of Tribune stock increasing nearly 16% from earlier in the year.
The complaint alleges that during the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts concerning the prospects for the Merger and the conduct of Sinclair during the Merger process. Specifically, the complaint alleges that while defendants frequently discussed the regulatory steps necessary to complete the Merger in public statements and presentations, including statements regarding Sinclair’s purported agreement to take certain actions in order to secure regulatory approval, defendants misstated or omitted certain facts, including that Sinclair was refusing to divest itself of television stations in certain markets that it had previously agreed to sell, and which was necessary in order to secure regulatory approval for the Merger, and Sinclair was taking the position that it was not legally or contractually obligated to complete the identified divestitures to ensure regulatory approval. As a result of defendants’ false and misleading statements and/or omissions, the price of Tribune common stock was artificially inflated during the Class Period to more than $43 per share.
Then on July 16, 2018, the Chairman of the Federal Communications Commission (the “FCC”) issued a statement expressing “serious concerns” about the Merger, stating that “certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.” In other words, Sinclair had proposed a plan to the FCC, which had been repeatedly rejected, under which Sinclair would still control stations that it was otherwise required to sell to comply with FCC regulations. On this news, the price of Tribune stock fell $6.44 per share, or more than 16%.
Subsequently, on August 9, 2018, Tribune announced that it had terminated the merger agreement with Sinclair and that it was suing Sinclair for $1 billion for breach of contract.