Scripps adopts 'poison pill' to fend off Sinclair's takeover bid
The defensive move follows an unsolicited $7-per-share offer from the rival broadcast group, which has built a nearly 10% stake in Scripps.
The E.W. Scripps Company (NASDAQ: SSP) has adopted a limited-duration shareholder rights plan, a defensive maneuver commonly known as a “poison pill,” in a direct response to an unsolicited takeover bid from rival broadcaster Sinclair, Inc. (NASDAQ: SBGI).
The move, announced Wednesday morning, is designed to prevent Sinclair from gaining control of the Cincinnati-based media company after it built a stake of nearly 10% and formally proposed an acquisition valued at $7.00 per share. Scripps shares traded at $4.38 in midday trading, well below Sinclair’s offer price, suggesting significant market skepticism about the deal's prospects.
According to a company statement, the rights plan will be triggered if any entity acquires 10% or more of Scripps' Class A common shares. Should that threshold be crossed, existing shareholders would be entitled to purchase additional shares at a 50% discount, effectively diluting the stake of the hostile bidder and making a takeover prohibitively expensive. The plan is set to expire on November 26, 2026.
This defensive strategy underscores the Scripps board's intent to control the negotiation process. The company stated the plan aims to ensure all shareholders “receive fair and equal treatment” and to allow the board sufficient time to evaluate the unsolicited proposal.
Sinclair's offer, which consists of $2.72 in cash and $4.28 in combined company stock, represented a nearly 200% premium over Scripps' 30-day average share price before Sinclair began accumulating its stake. Sinclair has argued that a merger could unlock significant value, projecting approximately $325 million in synergies and creating a combined entity with a market capitalization of around $2.9 billion.
However, the path to a friendly or hostile merger is complicated by two major obstacles: Scripps' ownership structure and the likelihood of intense regulatory scrutiny.
The most formidable barrier to Sinclair's ambitions is the Scripps family's control of the company. The family holds approximately 93% of the voting interest, giving it veto power over any proposed transaction. This dual-class share structure means Sinclair cannot force a deal through by appealing to public Class A shareholders alone; it must win the approval of the family and the board they influence. This control dynamic is a primary reason for the wide spread between the current stock price and Sinclair’s offer.
Furthermore, a merger of two of the nation's largest owners of local television stations would almost certainly trigger a rigorous review from the Federal Communications Commission (FCC) and the Department of Justice. Regulators have become increasingly wary of consolidation in the local media landscape, and a tie-up between Sinclair and Scripps would test the current administration's stance on media ownership limits.
Analysts have noted Scripps' own financial challenges, including a high debt-to-equity ratio, which could make a premium offer attractive. Still, the board's swift adoption of a poison pill signals a clear preference for strategic independence or, at a minimum, a much higher price negotiated on its own terms. With the rights plan now in place, the ball is back in Sinclair’s court to either raise its offer, negotiate directly with the powerful Scripps family, or walk away from the table.