FCC raises concerns over Sinclair-Tribune transaction

The ambitious merger between the most diversified local TV station operators, Sinclair (SBGI) and Tribune Media (TRCO) is in jeopardy now. It appears that the $3.9 billion mega-merger — projected to close during the second quarter of this year —  won’t close anytime soon as the FCC chairman has expressed concerns about the deal.

Sinclair’s shares took a dive after the FCC chairman sent out a tweet on Monday stating he has “serious concerns” about Sinclair/Tribune transaction, thus weakening the prospects for a deal. FCC Chairman Ajit Pai spoke against Sinclair’s plan to sell a handful of assets in order to meet the ownership guidelines and appease regulators. Pai stated that the deal will still allow Sinclair to control stations.

In the same tweet, the chairman notified that he was assigning the controversial deal for review before the administrative law judge.

Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction. I have shared with my @FCC colleagues a draft order that would designate issues involving certain proposed divestitures for a hearing in front of an administrative law judge. pic.twitter.com/WnCTGiC7Da

— Ajit Pai (@AjitPaiFCC) July 16, 2018

But Sinclair has rubbished these claims and stresses on the fact that it has never misled anyone and has been transparent about its plans. The broadcaster said it has sincerely complied with FCC rules and is willing to adjust the deal again if needed.

Related: Sinclair inches closer to Tribune deal

This latest development comes as a great relief to the Democrats and other groups who criticized the deal and believed that Sinclair/Tribune merger was favored by FCC.

Sinclair has been wrapped in a lot of controversies lately and was criticized over the favorable coverage for President Trump.

In fact, Pai himself was criticized for amending the broadcast ownership rules as many claim his actions were biased in favor of Sinclair.

Related: Sinclair to sell stations to win FCC approval for Tribune deal

Sinclair owned 6% more TV stations even before the deal. And if this deal goes through, Sinclair, which owns over 173 broadcast stations, is said to dominate in over 70% of the American households, beating major players like 21^ST Century Fox (FOXA) and Nexstar (NXST).