Sinclair Broadcast Group's proposed acquisition of Tribune Media for $3.9 billion will go to an administrative judge after Federal Communications Commission Chairman Ajit Pai said Monday he had "serious concerns" about how Sinclair planned to divest some of the TV stations to meet regulatory scrutiny.
Pai's statement is the first time the FCC, largely seen as friendly toward TV station consolidation, has raised a concern over the transaction. Tribune Media's stock sank as much as 18 percent.
"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."
"When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction," he said. "Instead, the law requires the FCC to designate the transaction for a hearing in order to get 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 administrating judge."
Sinclair is the largest owner of TV stations in the United States, with 192. The Maryland company announced in May 2017 that it planned to acquire Tribune Media's 42 TV stations in 33 markets, including Los Angeles station KTLA.
Sinclair announced in April that once the acquisition was completed, it would sell 23 stations to comply with regulations that limit TV station ownership to outlets that reach 39 percent of U.S. households. However, some of those stations, which include Tribune Media flagship WGN in Chicago, would remain under the control of Sinclair even with the new ownership.
