Fox News parent company Twenty-First Century Fox, Inc. (NASDAQ: FOX) in partnership with a New York private-equity firm Blackstone Group, Sinclair Broadcast Group Inc. (NASDAQ: SBGI) and Nexstar Media Group Inc. (NASDAQ: NXST) are reportedly interested to acquire the TV station operator Tribune Media Co. (NYSE: TRCO). Shares of Tribune spiked more than 6% Monday morning after a report published by Financial Times, which indicated the most recent acquisition interest from Fox.
The sudden bid war to acquire Tribune Media is not accidental. The Federal Communications Commission (FCC) is on the pass changing the rules on its ownership regulations, allowing further station consolidation. The change in regulations make the acquisition of Tribune media possible by another major broadcaster possible. With 42 television stations in major cities like New York, Los Angeles and Chicago, and with a market cap of $3.2 billion, Tribune Media is attractive. Sinclair for example, has a strong market nationwide but a weak presence in major cities. Buying out Tribune will change that.
Fox’s move is in part motivated by preventing Sinclair from acquiring Tribune, as Sinclair already owns many Fox affiliates, and acquiring Tribune will provide Sinclair ownership of more than 28% of all Fox affiliates, according to a report by Bloomberg. Trying to prevent Sinclair from having stronger leverage against Fox, CEO James Murdoch partnered with Blackstone in order to expand Fox’s station holdings without much cash outlay. According to the terms of the partnership Blackstone would provide cash for a purchase of Tribune with Fox putting its 28 television stations into the partnership.