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Sinclair botched the deal to buy Tribune so badly that Tribune is now suing them

Tribune just called off the merger with Sinclair, the pro-Trump news conglomerate.

For months, it seemed like Sinclair Broadcast Group, a pro-Trump local news conglomerate, was on a path to expanding its audience reach with its proposed purchase of Tribune Media — a deal that would have brought Sinclair to nearly three in four American households.

But Sinclair — known for forcing its 193 local TV stations to air pro-Trump segments and anti-media screeds — got greedy. It tried to brazenly sidestep Federal Communications Commission rules that cap how much one company can own in the TV landscape, an effort that prompted Trump-appointed FCC Chair Ajit Pai to express “serious concerns” about the deal.

On Thursday, Tribune Media called off the deal — and then said it was suing Sinclair for breach of contract.

In a statement, Tribune said Sinclair did not “use its reasonable best efforts to obtain regulatory approval,” as it said it would in the merger agreement.

As New York University media critic Jay Rosen tweeted, Sinclair botched this deal in one of the most favorable regulatory environments in recent history. Not only did President Trump want to see this happen, but Pai made moves to accommodate this transaction.

How Sinclair planned to skirt FCC rules

Sinclair had a deal in place to purchase Tribune Media, which would extend its reach to about 72 percent of Americans.

In the map below, you can see which stations Sinclair would own or control if it bought Tribune. (The interactive version is here.)

Alvin Chang/Vox

The core issue standing in the way was the FCC rule preventing a single media company from reaching more than 39 percent of American homes.

One way to pass FCC muster would have been to sell off enough stations to get under the cap. But Sinclair — and the Pai-led FCC — had other ideas.

When Pai took over as FCC chair, he changed the way the commission calculated its audience reach to an outdated measure, which opened a loophole to allow Sinclair to divide its reach in half. Clearly, Pai didn’t express any issues with this change at the time.

Then, as Sinclair detailed in an FCC filing, the company would sell stations in eight of the largest markets, including New York, Chicago, and Seattle. That move would put it under the 39 percent limit.

How Sinclair crossed the line

But Sinclair wasn’t planning to sell these stations outright.

Instead, it planned to sell these eight stations with an agreement that it would continue to actually run the stations, according to FCC filings.

One FCC official told Politico that one of the more problematic plans was for Sinclair to sell Chicago’s WGN to Steven Fader, a Maryland business executive who owns car dealerships. Part of the agreement was for Sinclair to manage the advertising and programming, as well as having the option to buy back the station.

These plans to have overt control over the stations were a sticking point for Pai.

In his statement, Pai said that Sinclair’s strategy would “allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

He proposed that the deal be sent to an administrative law judge, a step that put the deal in jeopardy.

Sinclair got greedy

Here’s the astounding part: Sinclair had a friendly regulatory environment in which to work — and still messed it up.

In addition to his change in the way audience reach is calculated, Pai also explored the possibility of increasing these ownership limits outright — which, again, helps Sinclair. The content and timing of these decisions caught the attention of the FCC inspector general’s office, which is currently investigating whether Pai improperly showed “preferential treatment” to Sinclair.

The lone Democrat on the FCC, Jessica Rosenworcel, put it more bluntly: “As I have noted before, too many of this agency’s media policies have been custom built to support the business plans of Sinclair Broadcasting.”

But Sinclair wanted more. It brazenly tried to find ways to control more stations than allowed. And in December, Sinclair pushed back against a $13 million FCC fine for failing to disclose that what looked like news stories were actually sponsored commercials by a cancer institute. Sinclair argued it shouldn’t be fined for “simple human error.” Perhaps this defiance of the FCC didn’t sit well with the commission.

As Politico’s Margaret Harding McGill puts it, this was a “tale of stunning hubris.” One person in the media industry told her: “Let’s be honest, if you’re Sinclair and you lose Chairman Pai, you’ve done something wrong.”

Sinclair had all the pieces to build an even more powerful conservative media juggernaut — a tool to further influence political messaging on the local level, unlike any other company in the US, all while sitting in the good graces of the FCC chair.

But its greed cost Sinclair the biggest deal in its history.