Sinclair-Tribune Merger in Danger as FCC Chairman Voices ‘Serious Concerns’

Ajit Pai to send deal through protracted administrative process

Last Updated: July 16, 2018 @ 10:47 AM

FCC Chairman Ajit Pai said on Monday he has “serious concerns” about Sinclair Broadcast Group’s $3.9 billion bid for Tribune Media, and proposed sending the merger to a hearing before an administrative law judge — putting the deal in regulatory limbo.

Pai called into question Sinclair’s plan to sell several TV stations in an effort to appease regulators, saying the deal would still allow Sinclair to control the stations.

“Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction,” Pai said in a statement shared with TheWrap. “The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

Pai added: “When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction. Instead, the law requires the FCC to designate the transaction for a hearing in order to get to the bottom of those disputed issues.  For these reasons, I have shared with my colleagues a draft order that would designate issues involving certain proposed divestitures for a hearing in front of an administrative law judge.”

The hearing would push the merger back months, putting the deal in jeopardy. Sinclair shares dropped more than 4.5 percent immediately after Pai’s announcement.

Before Monday, the merger had already ensnared the Trump-appointed FCC chairman. Pai has been under investigation from the FCC’s inspector general since late last year. Investigator general David L. Hunt is looking into whether Pai spearheaded a rules change in 2017 in cahoots with Sinclair Broadcasting. The new rules allow media companies to increase the maximum amount of television stations they own.

The FCC pulled back on regulations against media consolidation in April 2017. Weeks later, Sinclair announced a nearly $4 billion deal to acquire Tribune Media — an acquisition that wouldn’t have been possible a month earlier. Sinclair owns more TV stations than any other company in the United States. The merger would allow Sinclair to bolster its lineup in dozens of markets, including New York and Chicago.

A draft of the FCC’s order said the merger may “involve deception,” according to Reuters.

The station owner has been widely ridiculed for enforcing “must run” commentaries in its subsidiary stations’ broadcasts. Sinclair faced threats of an employee walkout and advertiser boycott in April over a video showing dozens of its news anchors robotically reading a company-mandated script bashing the media and echoing Trump talking points.

Just this spring, Sinclair hired Trump White House alum Kaelan Dorr as its new executive political producer.

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