FCC chief’s about-face may scuttle Sinclair-Tribune deal
Sinclair Broadcast Group thought it had a friend in Ajit Pai when he was appointed to lead the Federal Communications Commission.
“We’re very optimistic about this new FCC and the leadership of Ajit Pai,” CEO Christopher Ripley told investors in February 2017.
That optimism took a hit Thursday as the FCC sent Sinclair’s $3.9 billion proposed purchase of Tribune Media Co. to an adminis- trative hearing that could take months — long enough to potentially kill the deal.
The decision seemed a turnabout for Pai, a Republican chosen by President Donald Trump. Critics say Pai has gone out of his way to befriend Sinclair, known for its conservative views and admiration of the president. He even appeared at a Sinclair gathering in its hometown of Baltimore — and he has mowed down media ownership rules the company opposed.
“For too long the FCC has twisted & bent its policies to serve the business plans of Sinclair Broadcasting,” FCC Commissioner Jessica Rosenworcel, the agency’s sole Democrat, said in a tweet Thursday. “As I’ve said before, this is not right. I’m glad my colleagues now agree & have supported halting the Sinclair-Tribune merger.”
Pai’s FCC has benefited Sinclair’s business model in several ways. The agency has loosened restrictions on broadcasters owning multiple stations in a market, and eliminated a requirement for them to keep a local studio. It’s also reduced scrutiny of how TV stations share services and revenue and is considering further easing broadcast ownership restrictions.
Democrats have complained and the FCC’s inspector general is probing whether Pai improperly pushed for rule changes that helped Sinclair — an accusation the FCC called “absurd.”
With the Tribune deal under review last August, Ripley told investors the “FCC has been very constructive in terms of its review.”
That view from the broadcaster’s corporate offices may have changed this week. On Monday, Pai, in his first public assessment of the deal, expressed criticism. The FCC order released Thursday contained harsh language.
“There is a substantial and material question of fact as to whether Sinclair affirmatively misrepresented or omitted material facts,” the FCC said as it assigned the deal, which was first proposed last year, to a hearing before an FCC administrative law judge.
The agency asked whether Sinclair had “attempted to skirt the commission’s broadcast ownership rules.”
Sinclair, which grew from a single television station in Baltimore in 1971, envisions the deal as an opportunity to bolster its nationwide presence with Tribune stations in major cities such as New York and Chicago. The expansion would give a bigger platform for Sinclair’s conservative voices, including former Trump aide Boris Epshteyn.
But there’s a problem. Sinclair already owns more stations than any other company, and the Tribune purchase would push it over 200 — so many stations that divestitures would be needed to comply with the limits.
The FCC focused on several proposed divestitures, including Sinclair’s planned sale of WGN-TV in Chicago to a Maryland automobile executive who’s a business associate of Sinclair Executive Chairman David Smith.
“We question the legitimacy of the proposed sale of a such a highly rated and profitable station in the nation’s third-largest market to an individual with no broadcast experience, with close business ties to Smith, and with plans to own only the license and minimal station assets,” the FCC said.
Sinclair didn’t issue any statements; Tribune said it was assessing its options but called the order “troubling.”
“The chairman evaluates mergers based on the facts specific to each one,” Tina Pelkey, an FCC spokeswoman, said in an email. “The order clearly lays out the concerns the chairman had with the merger.”