FCC raises concerns about Sinclair-Tribune deal

Federal Communications Commission Chairman Ajit Pai said on Monday he had “serious concerns” about Sinclair Broadcast Group Inc’s proposed $3.9 billion acquisition of Tribune Media Co, a surprise move which could potentially scuttle the deal and sent shares of both companies tumbling.

Pai, a Republican, said evidence presented as part of the approval process suggested that the planned divestiture of certain television stations “would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

Pai, whom Democrats have accused of making a string of decisions benefiting Sinclair, proposed referring the matter to an administrative law judge. The move could result in a lengthy delay and could effectively kill the deal, as in other mergers referred for administrative proceedings.

Sinclair, the top US television broadcast group, said in a statement late Monday it was “shocked and disappointed” by the announcement and denied it was not in compliance with FCC rules. The company said it was “prepared to resolve any perceived issues” and looked “forward to finalizing our acquisition of Tribune Media.”

Tribune shares closed down 16.7 percent to $32.12, while Sinclair dropped 11.7 percent to $29.10.

Tribune declined to comment. Pai and Sinclair have previously denied the Democrats’ accusations. Democrats have also said the FCC’s inspector general is probing the allegations. Sinclair, which owns 192 stations, said in May 2017 that it planned to acquire Chicago-based Tribune’s 42 TV stations in 33 markets.

In April, Sinclair said it would sell 23 TV stations to obtain the necessary regulatory approvals. It needs FCC permission to own more than one station in some markets.

Pai’s statement raising questions about whether Sinclair would continue to control some of the stations it proposes to divest followed similar questions raised in separate filings with the FCC last month by the American Civil Liberties Union and conservative news outlet Newsmax Media.

The deal has come in for sharp criticism that it would lead to significant TV station consolidation in the United States by many Democrats and by the attorneys general of three states who in a filing last month urged the FCC to reject the deal.

Sinclair, based in Hunt Valley, Maryland, has said that if the deal was approved, it would reach nearly 59 percent of the nation’s television households. Sinclair said Monday the deal “will create numerous public interest benefits and help move the broadcast industry forward at a time when it is facing unprecedented challenges.” (RTRS)