FCC Roadblock Halts Sinclair’s Growing Empire (For Now)

In the 14 months since Sinclair Broadcast Group unveiled a $3.9 billion deal to purchase Tribune Media (and the company’s 42 local television stations), analysts have quietly predicted that federal regulators would approve the deal.

But on July 16, the FCC’s politically conservative chairman, Ajit Pai, 45, turned things upside down, revealing that he has “serious concerns” about the tie-up and calling for an administrative law judge to take a look at whether Sinclair is planning to secretly control — through so-called “sidecar” deals — the local stations it must sell off to get the transaction approved.

Sinclair, a broadcast behemoth that skews right politically, said it was “shocked” by Pai’s plan to designate the purchase to an administrative hearing, and Tribune Media’s chief executive Peter Kern said he was “disappointed” by the move.

To address Pai’s concerns, Sinclair said on July 18 it would amend three previously announced station divestiture plans involving markets in Houston, Dallas and Chicago. “As a result and in light of the ongoing and constructive dialogue we had with the FCC during the past year, we were shocked that the concerns being raised now are being raised for the very first time,” the company said in a new, amended statement. “Nonetheless, we have decided to move forward with these additional changes to satisfy the FCC’s concerns.”

Insiders are trying to get a handle on whether the acquisition is fatally damaged. “I think the deal is effectively dead,” says Christopher Ruddy, the CEO of Newsmax Media and a critic of the plan. “Sinclair will have to spend months defending itself against serious charges, including a claim it engaged in deception with the commission. I think the FCC is clearly signaling they want it to end.”

Former FCC commissioner Michael Copps says his former agency “designates transactions for an administrative hearing when the agency can’t find the transaction will serve the public interest.”

Copps points to several media mergers — including Comcast’s $45 billion bid for Time Warner Cable in 2015 and AT&T’s agreement to buy T-Mobile in 2011 for $39 billion — that were withdrawn after being designated for review (or threatened with review). While Copps had consistently indicated that he expected the deal to be OK’d, he now says that “Sinclair will have a much harder time getting its merger approved.”

Sinclair’s purchase of Tribune Media, which would give the combined entity control of 233 local stations (before divestitures), has been met with opposition — including the bipartisan Coalition to Save Local Media (which Ruddy and Copps belong to) — since it was announced in May 2017.

The deal also has drawn the ire of Democrats, who view the media giant’s “must-run” segments as propaganda, a portrayal the company rejects.

“Regardless of how long the administrative law judge takes to review this deal, or if Sinclair ends up withdrawing the merger, Americans have already won,” says Rep. Tony Cardenas of California, “We’ve shown we will not let an anticompetitive merger go through without a fight.”

A version of this story first appeared in the July 18 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

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