Murdoch Scores Another Win as Rival Sinclair Deal Imperiled
(Bloomberg) -- Things in Washington just keep going Rupert Murdoch’s way.
The 21st Century Fox Inc. chairman stands to be a big winner after rival Sinclair Broadcast Group Inc.’s plan to buy Tribune Media Co. was thrown into jeopardy on Monday. Ajit Pai, the chairman of the Federal Communications Commission, questioned the legality of the deal and proposed a hearing that could kill it.
The sudden setback for Sinclair is the latest evidence of Murdoch enjoying a hot streak in the nation’s capital. Since the 2016 presidential election, the billionaire has forged close ties with President Donald Trump. The president’s administration has recently made a series of decisions that could benefit Fox’s business or thwart its competitors. A spokesperson for Fox declined to comment.
Last week, the Justice Department appealed a ruling that allowed AT&T Inc. to buy Time Warner Inc. Though considered a long shot, the move threatens to unwind a deal involving one of Fox News’s rivals, the CNN news network, and also complicates attempts by Comcast Corp. to buy much of Murdoch’s empire. The cable company’s bid for Fox’s assets hinged partly on AT&T winning its case, since it lessened concerns among Fox shareholders that regulators would intervene.
Fox has an agreement with Walt Disney Co., and the Murdoch family would see more tax benefits in that deal than with Comcast. While the Trump administration held up AT&T’s deal for about 20 months, regulators approved Disney’s purchase of Fox in June after six months.
Sinclair, in a statement late Monday, said it has been “completely transparent” with the FCC about its Tribune deal, and is prepared to resolve any perceived issues. Tribune said Tuesday that while it’s “disappointed” by the hearing order, it “expects to work with the FCC to explore ways to address the concerns identified.”
But B. Riley FBR Inc. analyst Barton Crockett said he’s never seen such “harsh” language from the FCC about an applicant for a merger. The “vitriolic” tone of the FCC statement makes it dubious that Sinclair and Tribune will be able to come back with divestitures that will satisfy the FCC, Crockett said in a note.
Fox and Sinclair have had a fraught relationship that goes back more than three decades. Over the years, they have done plenty of business together. Sinclair owns dozens of local Fox affiliates, meaning they carry local news along with Fox programming like “The Simpsons.” The two companies split the resulting fees paid by cable operators. In theory, Sinclair’s purchase of Tribune would have given it a stronger negotiating hand in talks with Fox about how to divvy up those fees.
Last year, Fox tried unsuccessfully to outbid Sinclair for Tribune. Afterward, in a rare move, Fox threatened to pull its affiliates from Sinclair and switch the stations to an independent broadcaster. Eventually, in order to satisfy regulators, Sinclair agreed to sell some Tribune stations to Fox, which, in turn, said it would renew Sinclair’s affiliation with more than two dozen stations.
Sinclair may soon compete with Fox News for right-leaning TV viewers. Already, it requires that its stations air some conservative opinion programming that is interjected within its local newscasts. The company has been in talks to hire former Fox News stars to create a block of conservative programming, according to Politico. It also is planning to start a streaming TV service that could compete with Fox News, BuzzFeed reported last week.
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