Are you a former employee of Sinclair Broadcast Group, Inc. and own stock in the company?
Sinclair Broadcast Group, Inc. (SBGI) Class Action Survives Motion to Dismiss
In August 2018, shareholders filed a class action suit against Sinclair alleging that the Company was responsible for the failed $3.9 billion Tribune Media merger by lying to regulators and failing to comply with their divestiture requirements.
Rather than severing ties with the stations cleanly, plaintiffs allege Sinclair attempted to circumvent regulators’ rules on the number of U.S. television stations one company can have an interest in by offloading certain assets to family members and longtime business associates. This would pave the way for Sinclair to repurchase stations after the sale went through. One such divestiture was the sale of two Texas television stations to Cunningham Broadcasting Corp., which shareholders allege was intended to benefit Sinclair’s majority owners, the Smith brothers, as Sinclair arranged to retain the right to buy back the stations.
On February 5, 2020, it was announced that the shareholders’ securities class action against Sinclair survived the Company’s motion to dismiss. U.S. District Judge Catherine C. Blake stated in her justification, “taking the allegations in the amended complaint as true, Sinclair concealed the risk that its de facto control of Cunnigham could result in FCC rejection of the merger” and went on to state that the plaintiffs had adequately alleged that the stock price deflation was a result of Sinclair misrepresenting the nature of its relationship with Cunnigham. The decision paves the way for litigation to proceed.