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Nexstar Is Said to Be Buying Tribune Media for $4.1 Billion

Tribune Media's WGNTribune Media's WGN
A sign sits outside the studio of Tribune Media Company's, WGN television studio on May 8, 2017 in Chicago, Illinois. Scott Olson—Getty Images

Nexstar Media Group Inc. agreed to buy Tribune Media Co. for $4.1 billion, creating the largest owner of local-TV stations in the U.S., according to a person with knowledge with the matter.

Nexstar outbid private equity firm Apollo Global Management LLC with an all-cash offer that values Tribune at about $46.50 a share, said the person, who asked not to be identified because the purchase isn’t yet public. An announcement could come as soon as Monday.

The deal would create a new king of local TV, unseating Sinclair Broadcast Group Inc. Four months ago, Sinclair was forced to abandon its own takeover attempt for Tribune after the $3.9 billion transaction drew the ire of regulators. Nexstar had been interested in Tribune last year before Sinclair had agreed to buy it.

Tribune is now set to fetch a higher price from Nexstar — and a 15 percent premium over its closing price of $40.26 at the end of last week.

Bulking up will give Nexstar more leverage as it negotiates retransmission fees from pay-TV providers. Broadcasting companies also are pairing up in the hopes that their size will help ward off a threat from Netflix Inc. and other streaming services.

Search for Scale

“One of the responses we’ve seen across the media landscape has been consolidation,” said Paul Sweeney, an analyst at Bloomberg Intelligence. “Let’s get bigger. Let’s get scale. Let’s respond to some of these technology media companies.”

This marks the second major deal among broadcast-station owners in 2018. In June, Gray Television Inc. agreed to buy Raycom Media Inc. for $3.65 billion.

Nexstar, based in Irving, Texas, has about 175 TV stations, including NBC, CBS, ABC and Fox affiliates, which reach roughly 40 percent of U.S. households. Chicago-based Tribune owns or operates more than 40 stations, as well as the national network WGN America. Reuters reported Nexstar’s deal for Tribune earlier on Sunday.

Sinclair’s Tribune takeover began to crumble over the summer, when U.S. Federal Communications Commission Chairman Ajit Pai questioned the legality of a plan to sell TV stations in order to meet ownership limits. “I have serious concerns about the Sinclair/Tribune transaction,” Pai said at the time, sending shares of both companies plunging.

Tribune Balks

The commission voted unanimously to send the issue to an administrative hearing judge, something that can delay or even kill a transaction. Tribune ultimately backed out of the deal.

Sinclair, which has 191 stations in its lineup, is known as a politically conservative broadcaster that’s friendly to the Trump administration. As the Tribune deal fell apart, the president slammed the FCC’s role in scuttling the merger, saying it was “sad and unfair.”

“This would have been a great and much needed Conservative voice for and of the People,” Trump said in July.

In acquiring Tribune, Nexstar may be able to sidestep the regulatory problems that Sinclair faced, according to Bloomberg Intelligence’s Sweeney.

“Nexstar has a very longstanding, positive relationship with the FCC,” he said.