US Federal Communications Commission Chairman Ajit Pai said Monday that he has "serious concerns" about the merger between the Sinclair Broadcast Group and Tribune Media. In a statement, Pai said that he has proposed sending the $3.9 billion deal before an administrative law judge.
"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."
According to many analysts, Pai's proposal is a step toward killing the merger altogether. In 2011, AT&T and T-Mobile withdrew a merger application after then-FCC Chairman Julius Genachowski circulated a similar proposal to the commission. The announcement comes a welcome surprise for many opponents of the deal who had been concerned that the FCC was giving Sinclair special treatment.
According to the Hill, the agency's inspector general had opened an investigation into whether Pai's efforts to deregulate the broadcasting industry were intended to clear regulatory roadblocks for the deal. Pai has denied that his campaign to roll back media ownership restrictions was designed to help any single company.
As Bloomberg adds, Sinclair, which grew from a single TV station in Baltimore in 1971, is trying to leap into nationwide prominence with the deal for 42 Tribune stations in cities including New York. The purchase would lift Sinclair’s station total above 200. It’s being examined by the FCC and by antitrust regulators at the Justice Department.
In kneejerk response to the news, Sinclair shares tumbled as much as 8%, the most since February. Shares were down $1.55 to $31.40 around noon, after falling as low as $30.35. Tribune plunged as much as 18%, with frequent pauses for high volatility, for the biggest intraday drop since January 2017.