Sinclair Merger in Huge Trouble as FCC Chairman Pai Casts Skeptical Eye on Sham Deals

WASHINGTON — On Monday, Federal Communications Commission Chairman Ajit Pai announced that he would circulate an order designating the Sinclair Broadcast Group’s acquisition of Tribune Media for an administrative hearing at the agency.

Pai’s statement suggests that at least the divestitures Sinclair has proposed would be sent to a hearing because, in the chairman’s words, 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.”

In 2017, Sinclair announced a proposal to take over Tribune Media’s television stations, a merger that as originally proposed would have given the broadcast giant control of more than 233 local TV stations reaching 72 percent of the country’s population, far in excess of congressional and FCC limits on national and local media ownership.

Today’s announcement represents a remarkable shift by the FCC chairman. Since the deal’s announcement, Pai had removed public-interest safeguards that would have prevented Sinclair’s massive merger from being approved.

Free Press filed two lawsuits against the FCC’s weakening of ownership limits in federal court.

Free Press Policy Director Matt Wood made the following statement:

“Free Press hasn’t seen eye to eye with Chairman Pai since he took over the FCC. But today’s announcement is unequivocally the right thing to do under the law. This is a giant win for the public, and a huge setback for Sinclair’s mega-merger plans.

“Designating a transaction for a hearing is the FCC’s first step toward denying the deal. The Communications Act requires the agency to give merger applicants a shot to make their case before the FCC moves to withhold approval. But it’s extremely rare for transactions to be sent to a hearing in the first place, much less for parties to fight it out and beat the FCC in that hearing. That’s why analysts and investors rightly see today’s news as potentially a fatal blow for this merger.

“Even if only the divestitures go before an administrative law judge, today’s announcement has enormous ramifications for the entire deal. There’s simply no way for Sinclair to fit under the 39-percent national-audience reach cap without significant divestitures, even if the obsolete UHF discount, which the FCC reinstated last year, remains on the books after the D.C. Circuit hands down its decision on that rule change.

“If Pai’s announcement does spell the end of the Sinclair-Tribune deal, it’s a huge win for the public. That’s especially true for viewers in cities that will be spared Sinclair’s brand of racist, Islamophobic and xenophobic cookie-cutter propaganda, pumped out from Sinclair’s central headquarters. Millions of people have been exposed to the ways Sinclair forces local anchors to parrot its dangerous views and push a reactionary agenda. Hundreds of thousands of petitions against the deal have been flooding into the agency, and people have taken to the streets outside of Sinclair’s corporate headquarters to protest. The people have spoken and Ajit Pai appears to be listening.

“As we’ve always said, broadcasters are entitled to a political viewpoint. What they aren’t entitled to is an outsized megaphone for those views — which Sinclair has seized over the years by flagrantly violating our nation’s broadcast-ownership laws and ignoring the local communities it’s licensed to serve. This announcement could mark the turning of the tide against such unlawful broadcaster tactics.“

“The most interesting part of Pai’s announcement is his recognition that several of the divestitures Sinclair proposed are a sham that would leave the company in control of stations it purportedly sells off to relatives and cronies of Sinclair executives. Sinclair wrote the playbook on how to evade FCC rules like this, and Free Press has helped lead the fight against this type of covert consolidation with research and legal analysis put before the FCC over the past decade.

“We’re encouraged by Chairman Pai’s apparent recognition that Sinclair’s proposed divestiture of stations to shell companies is in fact unlawful. We encourage the FCC to examine all other such shell-company arrangements held by Sinclair, Tribune, and other broadcasters, too.”