On Monday, Sinclair Broadcast Group announced plans to acquire Tribune Media as part of a $3.9 billion transaction that is expected to solidify Sinclair’s position as the nation’s largest owner of local television broadcast stations. Sinclair currently owns 173 stations in 81 small and midsize markets throughout the U.S. Tribune—the owner of Chicago superstation WGN, which is carried on cable outlets throughout the country—owns 42 stations, many of which are located in major markets that include New York and Los Angeles as well as Chicago. When combined with previous, pending acquisitions that include Sinclair’s $240 million agreement to acquire the 14 television stations of Bonten Media Group, the Tribune deal would give Sinclair control of 233 stations covering 72% of U.S. television households.

Monday’s agreement was made possible, in part, by the FCC’s decision last month to reinstate the “UHF Discount.” By a 3-2 margin along party lines, the Tom Wheeler-led FCC had voted last August to eliminate the UHF Discount, which allows licensees of television stations broadcasting in the UHF spectrum bands to count half of the television households in their markets when determining compliance with the FCC’s 39% cap on national audience reach. Concluding that the FCC erred in eliminating the UHF Discount “without simultaneously considering whether the [national audience] cap itself should be modified,” the FCC’s two-member Republican majority voted last month to reinstate the discount pending the launch of rulemaking proceedings on potential changes to the national audience cap and other media ownership rules.

Even with the reinstatement of the UHF Discount, Sinclair officials acknowledged that they would consider divesting some stations to assuage any potential concerns the FCC may have with respect to the national audience cap. Meanwhile, as Sinclair CEO Chris Ripley touted the transaction as “a transformational acquisition . . . that will open up a myriad of opportunities for the company,” analysts predicted the expanded audience reach to result from the deal will provide Sinclair with significant leverage in acquiring new program content for its stations. Citing his company’s plan to offer wireless streaming and virtual multichannel video program distribution (MVPD) services through an initiative announced earlier this year with Nexstar Media Group, Ripley told reporters that Sinclair’s ambitions in the mobile MVPD market represent “a big strategic driver” behind the Tribune deal. 

Under the terms of Monday’s agreement, Tribune stockholders will receive $35 in cash and $8.50 in Sinclair stock for each share of Tribune stock held. Sinclair will also assume $2.7 billion in Tribune debt. The parties aim to complete the transaction during the fourth quarter, contingent upon receipt of FCC and other required approvals.