Sinclair Broadcast Group moved Monday to cement its position as the nation's largest broadcaster with a $3.9 billion agreement to buy Tribune Media Co., a deal made possible by a recent Federal Communications Commission decision to relax station ownership rules.
The proposed sale immediately sparked criticism from media watchdogs worried about the concentration of ownership even as analysts expected it would trigger a wave of consolidation as traditional broadcasters vie for viewers and advertisers in a digital age.
The deal would give Hunt Valley-based Sinclair, which grew out of WBFF Fox 45 in Baltimore, television stations able to reach 72 percent of U.S. households.
"It's transformative for the company and will create a leading media platform that will include the country's largest markets," said Chris Ripley, Sinclair's president and CEO, in an interview. "We think it's a great opportunity to improve the content across all the stations by networking the stations together and news sharing."
If the deal goes through, as most observers expect, Sinclair would own and operate 233 stations in 108 markets, though it may need to sell some stations to placate regulators.
The acquisition marries Sinclair, which has grown by gobbling up station ownership groups, mainly in smaller markets, with Tribune Media, which has 42 stations, some of them in the nation's largest markets, including New York City, Los Angeles, Chicago, Dallas and Houston.
The greater scale is expected to offer Sinclair significant advantages as the industry moves to a new broadcast transmission standard, which Sinclair helped invent. It will allow high-definition broadcasting to mobile devices and enable a flow of data that will pave the way for hyper-local zoned advertising, more mobile news and entertainment, and applications such as weather emergency alerts, vehicle traffic navigation and digital billboards.
"This will give us a huge station footprint, and we can roll out mobile-first advanced services, which will be targeted for personal devices, cellphones and tablets ... and be more like an internet experience," with heavy use of video, Ripley said.
Sinclair aims to benefit as much from technology as from the greater bargaining power that comes with size, said Karyl Leggio, a finance professor at Loyola University Maryland. Sinclair will have greater leverage to negotiate fees with cable companies, which pay Sinclair and other broadcasters to include their signals in channel lineups, she said.
In addition, "they're looking to combine to use their technology to reach customers the way customers are now gaining access to content, not just through television," Leggio said. "These industries have converged — NFL live-streams on Twitter — and Sinclair is going to be able to compete with some of those companies."
Tribune Media was created in 2014 when Tribune Co., then the parent of The Baltimore Sun, split its broadcasting and publishing divisions into separate, independent companies. The broadcast division became Tribune Media. The publishing division, including The Sun, became Tribune Publishing, renamed tronc Inc. last year.
Tribune Media retained ownership of The Sun's office building in Mount Vernon, putting the building, and much of its other real estate, up for sale. Baltimore-based Atapco Properties is in due diligence to buy The Sun building, which is leased by the newspaper.
Sinclair's purchase of Tribune will not change Atapco's impending purchase of the building, which is "on track," said Kevin McAndrews, Atapco's president, on Monday. He declined to give a timeline for the purchase or disclose any details.
Sinclair said it plans to sell off the Tribune-owned buildings that house newspapers within the next 24 months.
The acquisition would be the first major deal between broadcasters since the FCC voted in April to relax station ownership rules by reinstating the so-called UHF discount. That allows stations broadcasting on those higher-frequency airwaves to count only half their audience against a cap allowing a single company to own stations reaching no more than 39 percent of the nation's television households.
The changes were an about-face for the FCC under new Chairman Ajit Pai, appointed by President Donald Trump. Pai, a former top lawyer for Verizon Communications, has advocated for less regulation.
"The regulatory environment has suddenly become more accommodating for these types of transactions that were previously capped," said Tuna Amobi, an equity analyst at CFRA Research. "This deal is transformative, and it will kick off a wave of broadcast [mergers and acquisitions]. You can expect that other station groups are going to take note and look for ways to capitalize on a favorable regulatory environment."
That scenario alarmed some critics, who fear local broadcast viewers will lose out as companies merge.
"It's a massive and unprecedented bit of media consolidation from a company that has not hesitated to put its political imprint on its broadcasts," said Craig Aaron, president and CEO of Free Press.
Sinclair has drawn criticism in the past for using its news broadcasts to advocate conservative views, reflecting the political leanings of its executives.
"The public wins when there are multiple competing voices, including conservative voices," he said, "but the idea that one company so committed to centralizing content and pushing an ideological agenda would control this much of the local airwaves across the country is unbelievable."
Mark Feldstein, a broadcast journalism chair at the University of Maryland's Philip Merrill College of Journalism, said he too is concerned by the "loosening of some of the rules" governing broadcasting that will likely spur more consolidation.
"That's something that's always worrisome because of the issue of competition in the marketplace, particularly in the media where it's a marketplace of ideas," Feldstein said. "This is about what the citizenry learns and how it votes and safeguarding democracy."
Under the deal, Tribune stockholders will receive about $43.30 per share, including $35 in cash and 0.23 shares of Sinclair Class A common stock. Sinclair also will assume about $2.7 billion in debt.
Tribune shares rose more than 5 percent in Monday trading to close at $42.40 each. Shares in Sinclair slipped 83 cents to close a $36.12 each.
The boards for both companies unanimously approved the deal, which is expected to close in the fourth quarter of this year, funded by cash and debt. It must be approved by Tribune stockholders as well as the FCC, which could require Sinclair to sell off or swap some stations in markets where the two companies overlap, such as St. Louis.
For Sinclair, the most valuable Tribune assets were its TV stations, most in major markets, as well as its WGN America cable channel and partial ownership of the Food Network and online jobs site CareerBuilder, Ripley said. Once the deal is complete, Sinclair will employ more than 15,000 people.
"It creates a bigger footprint nationwide in which to launch advanced services," Ripley said. "It opens up our business to a plethora of options" that will go well beyond being a TV broadcaster.
Sinclair has said it wants to build a national news outlet, for example, tapping its local news-gathering operations.
"In order to have the most efficient offerings," Ripley said, "you need a nationwide network."
Baltimore Sun reporters Colin Campbell and Sean Welsh contributed to this article.