Tribune Workers Face $41 Million Haircut With Merger in Flux

(Bloomberg) -- Senior managers and certain other employees at Tribune Media Co. could lose out on as much as $41 million in compensation if the company's troubled merger with Sinclair Broadcast Group Inc. collapses.

The deal's been battered by federal regulators, and either company may back out without penalty after Aug. 8.

Tribune Chief Executive Officer Peter Kern's top three lieutenants would be eligible to split about $21 million in severance and other payments if the deal goes through and they don't secure jobs in the new company, according to data compiled by Bloomberg. In addition, the board has set aside a $20 million bonus pool for key employees to motivate them to stick with the Chicago-based broadcaster.

They may not see any of that money if the deal falls apart.

Tribune shares rose 0.9 percent to $33.87 at 11:59 a.m in New York.

More than a year after Sinclair and Tribune announced an agreement to merge, the deal has foundered on regulatory skepticism. The Federal Communications Commission last month questioned the legality of Sinclair's plans to sell stations to comply with ownership rules. The combined company would serve almost 59 percent of U.S. households, raising questions about the concentration of media voices.

The FCC in an order that won unanimous backing from commissioners sent the deal to a hearing before an administrative law judge that could last months; in the past the prospect of such a session has killed transactions as companies pull out rather than endure months of uncertainty.

Tribune in a July 19 statement called the FCC's order “troubling” and said it was “evaluating its implications and assessing all of our options.”

The company's decision will affect pay prospects for several Tribune executives.

Chief Financial Officer Chandler Bigelow is in line to get $7.78 million of severance and cash-outs of unvested equity awards if he's terminated within a year of the merger's completion, or if he doesn't get a job of similar stature in the combined entity. President Lawrence Wert would get $6.5 million under those circumstances and General Counsel Edward Lazarus would collect $6.77 million.

Tribune's board has set aside a $20 million pool earmarked for retention and transaction bonuses for key employees, and created another retention bonus program solely for a number of managers, filings show. CEO Kern is eligible to receive $3.25 million once the the merger is complete. The payments may not happen if the deal collapses.

Gary Weitman, a Tribune spokesman, declined to comment.

--With assistance from Jenn Zhao.

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net;Anders Melin in New York at amelin3@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, ;Pierre Paulden at ppaulden@bloomberg.net, Steven Crabill

©2018 Bloomberg L.P.