After seeing its stock hammered due to FCC Chairman Ajit Pai’s “serious concerns” about aspects of its pending merger with Sinclair Broadcast Group, Tribune Media said it is “disappointed” but still hopes to salvage the deal.

“Tribune Media was disappointed to learn that the Chairman had circulated an order designating certain issues for consideration by an Administrative Law Judge,” the company’s statement said. “It will review the FCC’s hearing designation order when released and expects to work with the FCC to explore ways to address the concerns identified. Until we have reviewed the order it is difficult to explain the potential issues it might create for the transaction. Fortunately, Tribune’s operations have been strong in 2018 and our team has done a terrific job of maximizing the value of the business through this extended regulatory approval process.”

CEO Peter Kern issued a memo to employees acknowledging the issue. “I know this latest development creates more uncertainty about our merger,” the memo said, “but try to stay focused on the business and the audiences, advertisers and communities we serve, just as you have done throughout the year.”

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The $3.9 billion merger with Sinclair, pending since May 2017, would create a mega-power in local television, but many observers said Pai’s plan to refer the matter for administrative review was tantamount to killing it. He flagged several so-called “sidecar” deals Sinclair struck to divest of certain stations in order to reach an acceptable limit because the new ownership would have been a thin disguise for Sinclair continuing to call the shots.

For decades, there has been a 39% cap on the household reach that any one station owner could have. The original blueprint for the Sinclair-Tribune merger would have put the combined company higher than 70% but planned divestitures would bring that number down. At the same time, the FCC has been reviewing the 39% cap and is expected to relax it, citing changes in the media landscape.

Stocks in both companies plunged on the news, with trading briefly suspended for Tribune. The company’s shares finished the day down 17% at $32.12.

Tribune’s 42 stations are mostly in major markets, including New York and LA. The company also owns cable network WGN America and a 31% stake in the Food Network and Cooking Channel, among other assets.