Sinclair’s Acquisition Of Tribune Media In Jeopardy
Sinclair Broadcast Group’s acquisition of Tribune Media Company will not be receiving the approval of Federal Communications Commission Chairman Ajit Pai as it’s currently structured, according to a statement released by the agency. The proposed $3.9 billion deal has been under regulatory review since May of 2017 and, until recently, was seen as likely to pass regulatory muster. Sinclair also needs Justice Department approval of the deal.
Under the deal, Sinclair, already the largest US TV station owner, would obtain 42 Tribune stations in key markets like New York and Chicago. If no divestitures were made, Sinclair broadcasting’s local TV stations would reach 72 percent of U.S. households. That is nearly double the current federal limit.
Under heavy criticism, Sinclair has revised the deal several times, with the companies now offering to divest themselves of 23 local stations to obtain approval for the merger. However, reports have emerged that some of the proposed sales were so-called “sidecar arrangements” that would have allowed Sinclair to keep a stake in the revenue and programming of the stations. Some of other stations would have been sold to a company with close ties to Sinclair.
Pai’s statement said: “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. Instead, the law requires the FCC to designate the transaction for a hearing in order to get to the bottom of those disputed issues.”
Pai is recommending that the merger be reviewed by an administrative law judge, which can spell doom for a deal. The 2015 merger of Comcast and Time Warner Cable was dropped after the FCC threatened to refer the case to an administrative law judge. The same thing happened with AT&T’s attempt to buy T-Mobile USA in 2011.