The Federal Communications Commission has voted unanimously against approving Sinclair Broadcast Group’s acquisition of Tribune Media Company, likely dooming the merger.
Technically, the commission adopted a Hearing Designation Order that refers the merger to an administrative law judge. Mergers usually don’t survive that legal process. Besides referring the merger to a judge, the FCC’s other options included denying the merger outright, approving the merger, or approving it with conditions.
Sinclair’s problems stem from its plan to divest some stations in order to stay under station ownership limits. FCC Chairman Ajit Pai proposed the designation order on Monday, saying that Sinclair’s proposal to divest certain stations “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 said Monday.
Sinclair’s last-ditch change wasn’t enough
After Pai’s announcement, Sinclair said it would revise its station divestiture plan in an attempt to avoid the referral to a judge. But the FCC was not swayed.
Pai’s proposal was on circulation, meaning that commissioners could vote on it at any time even though there isn’t an FCC meeting this week. Pai’s proposal quickly gained support from Democratic Commissioner Jessica Rosenworcel and Republican Commissioner Brendan Carr. Republican Commissioner Michael O’Rielly said prior to the vote that he would only support Pai’s referral if it “include[s] sufficient and defined timelines for the [judge] to conduct and process a hearing.”
It’s not clear whether the order included such a timeline, but the FCC said it would release the full text of it sometime today.
Sinclair owns or operates 173 broadcast TV stations in 81 markets, while Tribune has 42 stations in 33 markets. If no divestitures were made, “the combined company would reach 72 percent of US television households and would own and operate the largest number of broadcast television stations of any station group,” the FCC notes.