The Industry

Even Ajit Pai, Who Paved the Way for the Sinclair Merger, Now Thinks There’s Something Fishy About the Sinclair Merger

FCC Chairman Ajit Pai said he has “serious concerns” about Sinclair's proposed acquisition of Tribune Media.
FCC Chairman Ajit Pai said he has “serious concerns” about Sinclair’s proposed acquisition of Tribune Media.
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FCC Chairman Ajit Pai has taken a surprisingly tough stance on the Sinclair Broadcast Group’s proposed acquisition of Tribune Media, announcing on Monday that he has “serious concerns” about the $3.9 billion deal. He also recommended that an administrative law judge review the acquisition, a process that could very well dash Sinclair’s hopes of adding 42 Tribune TV stations to its 170-station empire.

“Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction,” Pai said in a statement. “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.”

Sinclair originally proposed to acquire Tribune Media last year. Such a deal would enable Sinclair to reach 72 percent of the country’s television audience. Democrats and media critics have long raised concerns about Sinclair’s practice of forcing its stations to broadcast “must-run” conservative political segments from commentators like former Trump aide Boris Epshteyn. In one case, executives ordered local anchors to read a script on air attacking mainstream media as “fake news.”

But when it comes to Sinclair, Pai is an unlikely skeptic. The chairman reportedly helped to facilitate the acquisition by making changes to media rules like reviving the UHF discount, a loophole that allowed Sinclair and Tribune Media to skirt federal ownership regulations. Still, in order to pass oversight muster Sinclair has proposed to spin off 23 Tribune stations, including larger ones in New York and Chicago, in order to comply with the regulations. The Justice Department, which is running its own review of the deal, had previously stated that Sinclair would have to sell of around a dozen stations in order to avoid antitrust issues.

Pai, however, appears to be worried that the conglomerate would be still able to effectively control the divested stations, even though he paved the way for the deal to go through in the first place. The administrative law review that Pai is proposing prompted AT&T and T-Mobile to withdraw a merger application in 2011. As the Wall Street Journal previously reported, Sinclair would still be operating these stations by managing advertising sales and local news coverage. The only difference is that Sinclair would no longer be the licensee, so it might still be possible for executives to order the stations to broadcast conservative commentary.

A number of Pai’s critics applauded his decision on Monday.

“Today’s announcement is welcome,” said FCC commissioner Jessica Rosenworcel, a Democrat, said in a statement. “As I have noted before, too many of this agency’s media policies have been custom built to support the business plans of Sinclair Broadcasting.” Gigi Sohn, who served as counselor to former FCC Chairman Tom Wheeler, also sent out a statement reading, in part, “Chairman Pai made the right decision in circulating a draft hearing designation order on the Sinclair-Tribune merger. This transaction would place far too many free over-the-air broadcast stations and far too much power in the hands of one company, and it’s been clear from its most recent filings that Sinclair’s promises to truly divest control over a number of stations in local markets were less than candid.”

Two of Pai’s fellow commissioners—Rosenworcel and Republican Brendan Carr—have reportedly voted to approve his proposal to send the deal to a legal hearing. The Justice Department’s review is ongoing.