21st Century Fox is in discussions with the private equity firm Blackstone with a view to jointly acquiring Tribune Media. With a market value of $3.2 billion, Tribune Media possesses a couple of television stations in the United States. Blackstone and 21st Century Fox are hoping a joint bid will beat an acquisition attempt by Sinclair Broadcasting, the biggest owner of television stations in the United States.

According to sources with knowledge of the plans, Blackstone will provide the cash required for the acquisition while 21st Century Fox will inject a portfolio of television stations. Currently, 21st Century Fox owns and operates 28 television stations in the United States though a couple of other stations owned by other firms such as Tribune Media also carry its broadcast network.

Defensive strategy

It is understood that the acquisition bid by 21st Century Fox is defensive to some extent. This is because in the situation that Tribune Media ends up in the hands of the rival bidder, the ownership of these stations will be in the hands of Sinclair, and thus giving it the upper hand in the carriage negotiations it will subsequently undertake with 21st Century Fox. Additionally, with 21st Century Fox and Tribune combining forces, the former will have more ways through which it can exploit its sports rights especially the National Football League rights.

Television stations owners have attracted interest since the U.S. Federal Communications Commission reinstated the ‘UHF discount’. The move by the FCC has ensured that station owners are now not required to include the channels they broadcast over the Ultra High Frequency Waves in coming up with the number of markets that they reach. Since firms do not have the permission to broadcast to a market size exceeding 40% in the United States, the reinstatement of the discount means that a barrier which was prohibiting the ownership of more television stations no longer exists.

UHF discount

The reinstatement of the discount also makes it more likely that there will be more consolidation in the market. This is one of the many new deregulatory measures that are expected to be unveiled affecting the media landscape by the new Republican-controlled U.S. Federal Communications Commission.

Interestingly, the two rival parties that have indicated interest in Tribune Media have a link to the Trump administration. The largest shareholder and chairman of Sinclair, David Smith, was one of the backers of Donald Trump in the 2016 U.S. presidential election. Blackstone’s chief executive, Steve Schwarzman, is currently serving the administration as the head of the business advisory council.

 

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