FCC Chairman Ajit Pai Has "Serious Concerns" About Sinclair-Tribune Merger

Pai said he is concerned about so-called "side-car deals" that would allow Sinclair Broadcast Group to maintain control of television stations it sells.

In a bombshell announcement on Monday morning, Federal Communications Commission chairman Ajit Pai said in a statement that he has "serious concerns" about Sinclair Broadcast Group's $3.9 billion acquisition of Tribune Media.

Pai's concern stems from the deals that Sinclair has made to divest television stations prior to the deal closing. Critics of the deal have said that Sinclair has made so-called "side-car" agreements that effectively allow the company to remain in control of the stations even after selling them. In some cases, Sinclair would have the option of buying back the divested stations after a set number of years, a condition that has raised eyebrows.

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

Continued Pai: "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 these disputes 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 administrative law judge."

Pai's statement on Monday comes as a surprise, as the deal was widely expected to be approved by an FCC that has been largely sympathetic to Sinclair in rule-making. Opponents of the deal, which include conservative media companies like Newsmax and One America News Network, will widely cheer the announcement.

Jessica Rosenworcel, an FCC commissioner representing the Democratic Party, released a statement supporting Pai's announcement. "For too long I have been the only one at the @FCC complaining about the favoritism this agency has shown Sinclair," she said. "I am glad that my colleague @AjitPaiFCC now shares my concerns. He deserves credit for the hearing designation order seeking to halt the merger with Tribune."

On Monday evening, Sinclair responded to the FCC. "Sinclair was shocked today by the news that FCC Chairman Pai was circulating an order proposing to designate our acquisition of Tribune for an administrative hearing," spokesperson Ronn Torossian stated.

The Sinclair statement added: "Throughout the FCC review process of this transaction, we have had numerous meetings and discussions with the FCC’s Media Bureau to make sure that they were fully aware of the transaction’s structure and basis for complying with FCC rules and meeting public interest obligations."