Scripps Howard Broadcasting Co. terminated its agreement yesterday to buy WMAR-TV (Channel 2) from Gillett Broadcasting, contending that unspecified terms for closing the pact had not been met.
Gillett took sharp issue with that contention and said it had filed suit in federal court in Chicago, charging that the termination was illegal. The suit seeks damages to be determined by the court.
"We have met all the conditions laid out in the agreement, and we expect Scripps Howard to live up to its part of the deal," George Gillett, chairman of the diversified, privately owned Colorado holding company that owns WMAR, said in a statement yesterday.
Scripps Howard, which agreed last July to purchase the station for $154.7 million, said two weeks ago that it might cancel the pact, which was to have taken effect Feb. 1. The Cincinnati-based television, radio and cable company declined yesterday to go beyond a brief declaration that it was ending the agreement because "certain conditions" of closing had "not been satisfied."
"That's as much 'why' as we're going to give you," said Rich Boehne, Scripps' director of corporate communications.
Arnie Kleiner, president and general manager of the local NBC affiliate, was out of town and unavailable for comment. But in a memo to the staff, relayed through the station's department heads, Mr. Kleiner said that "business and operations at WMAR will remain unchanged."
Media and financial analysts speculated that the sharp decline in Maryland's economy between the August agreement and last week's scheduled closing might have been a key factor in Scripps Howard's decision to pull out of the deal.
"In my mind, it's a case of economics," said Lauren Rich Fine, a media analyst with Merrill Lynch in New York. "My personal sense is that what looked like 10 times cash flow several months ago doesn't look like that anymore."
Ms. Fine also did not rule out the possibility that the two companies could negotiate a new agreement.
"To me, while Scripps terminated the agreement, it could still happen at a lower price," she said.
Ken Noble, a private media consultant based in Bronxville, N.Y., agreed that the economic climate may have influenced Scripps' decision but cautioned that the reason for the cancellation "may be more than that."
"I've seen more than one potential acquisition canceled because a closer look at the books found the parties were not in accord," he said.
WMAR staffers said they were puzzled and dismayed by yesterday's decision.
"I'm more perplexed than surprised," said anchorwoman Sally Thorner. "The uncertainty is unsettling. Being in limbo -- it's hard to forge on."
George Ward, acting shop steward for the International Brotherhood of Electrical Workers, which represents the station's technicians, said he was "disappointed" at Scripps' decision, saying he had hoped the sale would have put an end to the era of cost-cutting and union-management animosity that he said has characterized Gillett's five-year ownership of WMAR.
Gillett bought WMAR and a UHF station in Richmond, Va., for $209 million in July 1986 from the Times Mirror Co., publisher of The Sun. Times Mirror had bought the station from the A. S. Abell Co. but had to sell it because of federal prohibitions on cross-ownership of print and broadcast properties. At the time, WMAR was valued by financial analysts at $190 million.
Gillett put the station up for sale two years later, reportedly asking $275 million. But deals with a series of potential buyers never materialized until last summer's agreement.
Officials at Scripps Howard -- which owns nine television stations and five radio outlets, including WBSB-FM (B-104) in Baltimore -- described the deal at the time as an "attractive opportunity."
Two weeks ago, Scripps Howard said it would terminate the agreement "unless all conditions of purchase" were met, including Federal Communications Commission approval of the transfer of the station's license by Jan. 31.
The company said then that it was "highly unlikely" that FCC approval could be obtained by the deadline because of two pending legal challenges.
But an FCC attorney said last week that the challenges had been withdrawn.
Oct. 27, 1947: WMAR, created by the A. S. Abell Co., publisher of The Sun and The Evening Sun, becomes the first television station to go on the air in Baltimore and the second in the country to join the CBS network.
March 1981: CBS drops WMAR because of declining ratings.
May 1981: WMAR joins NBC.
May 1986: Times Mirror acquires WMAR as part of its purchase of the A. S. Abell Co.
July 1986: Times Mirror, required to divest itself of WMAR by federal regulations barring cross-ownership of print and broadcast properties, sells the station and a UHF outlet in Richmond, Va., to Gillett broadcasting for $209 million.
July 1988: Gillett puts WMAR up for sale, asking $275 million.
July 19, 1990: Scripps Howard Broadcasting Co. agrees to buy WMAR from Gillett for $154.7 million.
Aug. 7, 1990: Scripps Howard signs agreement to buy WMAR from Gillett, effective Feb. 1
Jan. 24, 1991: Scripps Howard announces it would terminate the agreement "unless all conditions of purchase" were met by the Feb. 1 deadline.
Feb. 1, 1991: Scripps Howard says it has informed Gillett that its board of directors would meet to "consider the matter of termination."
Feb. 8, 1991: Scripps Howard terminates the agreement to buy the station.