Sinclair Broadcast Group, the biggest USA local television station owner, has agreed to acquire rival Tribune Media for about $6.6bn, including debt, in a deal that is expected to be the first of many in the media industry following the Federal Communications Commission's recent decision to effectively loosen a cap on local television station ownership.
Under the deal, Tribune stockholders will receive $35 in cash and 0.23 share of Sinclair stock for each Tribune share and assume about $2.7 billion debt.
By buying Tribune, Sinclair hopes to "create a leading nationwide platform that includes our country's largest markets", according to Sinclair CEO Chris Ripley, in a statement. Adding Tribune's stations will also expand Sinclair's reach into major cities where it didn't have a presence before, such as NY and Chicago.
Tribune Media owns local TV stations across the country, including WGN in Chicago, WPIX in New York, KTLA in Los Angeles and WDCW in Washington.
Sinclair's ownership of stations in those markets would have "no impact on overall competition", Ripley said. The deal is expected to close in the fourth quarter.
Wells Fargo analyst Marci Ryvicker said the deal's biggest cost savings will come from retransmission fees, which are the payments station groups like Sinclair make to broadcasters such as Fox, CBS and NBC to carry their programming.
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There has also been speculation that Sinclair, with the addition of Tribune's portfolio, could try to launch a rival to Fox News, though the company has not commented on the possibility.
Early Monday morning stock trading had Sinclair's stock up 7% to $39.60 and Tribune stock 6% higher to $42.51.
Tribune Media is the former parent company of the Los Angeles Times and Chicago Tribune which were spun off into a new company - now named Tronc Inc. - along with Tribune's other publishing properties in 2014.
Sinclair, based in the Baltimore area, already owns 139 TV stations in 33 markets across the US, many of them affiliates of ABC, CBS, NBC, Fox and the CW. Public Knowledge, which usually is opposed media consolidation deals, said the Tribune buyout will reduce "viewpoint diversity" and contribute to the "homogenization of broadcasting".
"This will be the largest acquisition in our company's history, and I want to thank everyone from the Sinclair team, as well as our advisors and bankers who made this possible", added David Smith, executive chairman of Sinclair. "Television broadcasting is even more relevant today, especially when it comes to serving our local communities".
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