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In a decisive move against consolidation pressures in the media industry, the board of E.W. Scripps Co. has unanimously rejected an unsolicited acquisition proposal from Sinclair Broadcast Group. This decision, announced on a Tuesday, underscores the company’s commitment to its shareholders and operational independence.
The proposed acquisition, put forward by Sinclair on November 24, included an offer of $7 per share in a combination of cash and stock for the shares of Scripps that Sinclair does not already possess, having previously secured a 9.9% stake in the company. This move by Sinclair followed Nexstar Media Group’s substantial $6.2 billion acquisition of Tegna, highlighting the competitive nature of the current media landscape.
Board’s rationale behind the rejection
In a statement released on December 16, Scripps articulated that its board conducted a thorough review of Sinclair’s proposal with the assistance of financial and legal advisors. They concluded that the acquisition would not serve the best interests of Scripps or its shareholders.
Statement from the board
Kim Williams, the chair of Scripps’ board, emphasized their dedication to prioritizing the interests of all shareholders, employees, and the communities they engage with across the nation. Williams remarked, “After careful consideration, Scripps’ board determined that Sinclair’s unsolicited acquisition proposal is not in the best interests of Scripps and its shareholders.” She also noted that the board remains open to exploring opportunities that could enhance shareholder value, including potential acquisition proposals that align with their strategic goals.
Market dynamics and implications of the proposed acquisition
Sinclair operates a network of 185 television stations across 85 markets, while Scripps commands over 60 stations in more than 40 markets. According to Sinclair’s estimates, if the acquisition were successful, Scripps shareholders would hold approximately 12.7% of the new entity’s shares. This concentration of media ownership has raised concerns among various stakeholders.
In its filings with the SEC, Sinclair expressed confidence in the feasibility of the acquisition under the current FCC ownership limit of 39%, believing that the transaction could be completed efficiently with only minor divestitures. Sinclair projected that a merged company would achieve a market capitalization of about $2.9 billion with projected cost synergies of around $325 million.
Community concerns regarding consolidation
In a related context, a coalition of civil rights organizations has voiced strong opposition to the wave of consolidation occurring within the broadcast industry. They have urged the FCC to block proposed mergers involving Nexstar, Sinclair, and Gray Media. The coalition argues that these acquisitions will lead to excessive local television consolidation, significantly harming local news coverage and service commitments to the communities that depend on these stations.
The impact on local journalism
Signatories of the letter to the FCC, including organizations like the NAACP, LGBT Tech, and the National Urban League, contend that the proposed mergers threaten to exceed the ownership cap set by federal regulations. They assert that when a single entity controls multiple stations in a market, the quality and quantity of local news coverage typically declines. This could result in fewer independent newsrooms and an increase in duplicative content across formerly competitive stations.
The organizations warn that such concentration of media power could lead to higher costs for consumers, particularly affecting low-income households reliant on cable and satellite services for local news. They argue that households would see increased expenses as broadcasters leverage their consolidated power to negotiate higher fees with distribution networks.
The future of media ownership
As Scripps stands firm against Sinclair’s unsolicited bid, the broader implications of consolidation in the media landscape remain at the forefront of discussions. The decisions made by regulatory bodies like the FCC will play a critical role in shaping the future of media ownership and the availability of diverse local news coverage across the country.