The board of the E. W. Scripps Company has adopted a shareholder rights plan that is intended to insulate the broadcaster from opportunistic takeover offers from Sinclair, Inc. and other parties.
Under the terms of the plan announced on Tuesday, Scripps will issue one Class A common share right for each outstanding Class A common share and one common voting share right for each outstanding common voting share as of December 8.
The majority of Scripps’ voting stock is held by the Scripps family, descendants of newspaper tycoon Edward Willis Scripps. The shares that commonly trade on the New York Stock Exchange do not typically contain voting rights.
The plan adopted Tuesday becomes active if any party, not including the Scripps family, acquires more than 10 percent of the company’s stock. Sinclair currently owns 9.9 percent.
In a statement on Wednesday, Scripps Board of Directors Chairman Kim Williams said the plan is meant to ensure shareholders receive appropriate value and to give directors space to evaluate the proposal and any other strategic alternatives.
“The board is committed to acting in the best interests of all Scripps shareholders,” Williams said. “The rights plan safeguards shareholders’ ability to receive appropriate value for their investment and ensures that the board can assess the recently received proposal, and any strategic alternatives, in a thoughtful and orderly manner.”
Sinclair has not commented on the matter.
Scripps seems largely uninterested in a takeover buy Sinclair, which would create one of the largest local TV groups in the country. Sinclair owns or operates more than 160 local television stations, which Scripps has more than 60 stations in its portfolio. Most stations from the two broadcasters are affiliated with major networks like ABC, CBS, CW Network, Fox and NBC.
Sinclair’s pursuit of Scripps comes at a time when broadcasters feel the regulatory environment is favorable for mergers and acquisitions. The Federal Communications Commission (FCC) is currently undergoing a review of media ownership rules, which would make it easier for takeover offers like the one Sinclair has proposed to gain regulatory approval.
Under current rules, local broadcasters are not allowed to own a portfolio of stations that reach more than 39 percent of the American viewing audience.
Last week, President Donald Trump said he was opposed to a loosening of media ownership rules if it meant broadcast networks like ABC and NBC could grow larger. Separate rules govern the business structure of broadcast networks, which the FCC is also scrutinizing as part of its broader review of media regulations. Trump’s comments did not address consolidation in the local TV industry.
