Sinclair Inc.’s proposed acquisition of rival local television station owner E.W. Scripps Co. is quickly becoming a hostile situation.
Just days after the Maryland-based Sinclair, owner of Tennis Channel and 178 local stations, proposed its combination with Scripps, the Ohio-based owner of 60 stations and Ion, adopted a poison pill designed to thwart the deal.
Scripps has approved a limited-duration shareholder rights plan, lasting for one year and ensuring that its shareholders “receive full value in any connection with any proposal to acquire the company.” The plan will issue a dividend of a share right for each outstanding share to shareholders of record as of the end of business on Dec. 8, with that right becoming exercisable if an acquiring entity gains at least 10% total equity in Scripps.
Scripps is also offering shareholders the ability to buy additional stock at a 50% discount if the company is acquired by an unapproved party.
As of last week, Sinclair already held 9.9% of Scripps, so any additional share purchases by it would trigger the plan and dilute the stake of Sinclair or any other hostile bidder.
“The rights plan is intended to protect shareholders from coercive tactics and to provide the board with time to thoroughly evaluate the [Sinclair] offer and any other potential strategic alternatives,” Scripps said in a statement.
The standoff highlights the very different perspectives that Sinclair and Scripps have on the situation. Scripps clearly views the unsolicited offer as an unwelcome one and has quickly taken this series of moves to prevent it from happening. Sinclair, however, previously said that it was having “constructive discussions” about the merger, and that the deal was urgent given the heightened need for greater scale in a rapidly changing media business.
Given the blunt reaction from Scripps, however, at least some of those sentiments appear to have been overstated.
“We believe the strategic and financial rationale of a potential Sinclair-Scripps combination is indisputable,” Sinclair said in a statement. “Given the family control of Scripps, the only effect of adopting a poison pill is to limit liquidity opportunities for public shareholders of Scripps.”
Sports Impacts
Even as Main Street Sports, formerly Diamond Sports Group, is its own entity and no longer under the Sinclair umbrella, sports would remain a core element of any pact with Scripps. The Ion network owned by Scripps reached a multiyear extension of its rights deal with the WNBA this past June.
The Scripps sports portfolio, meanwhile, also includes rights to the NWSL, the Big Sky Conference, and local rights to a handful of pro teams, including the two-time defending Stanley Cup champion Panthers, the Golden Knights, the Mammoth, Lightning, and defending WNBA champion Aces. With these pacts, Scripps has been at the heart of a broader resurgence for sports in over-the-air television.
Sinclair’s bid for all of Scripps follows a separate, $6.2 billion deal between Nexstar Media Group and Tegna Inc., which is still undergoing regulatory review.
