FCC Chairman Pai Voices 'Serious Concerns' About Sinclair-Tribune Deal, Proposes Hearing Before ALJ

Hearing?

A brief, one-paragraph statement from FCC Chairman AJIT PAI has put the $3.9 billion SINCLAIR BROADCAST GROUP-TRIBUNE MEDIA deal into jeopardy, calling for a hearing on the deal before an administrative law judge in a move that typically leads to deals being scuttled.

The full statement read, "Based on a thorough review of the record, I have serious concerns about the SINCLAIR/TRIBUNE transaction. 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. 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. 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.”

Commissioner JESSICA ROSENWORCEL, widely considered an opponent of the transaction, greeted PAI's proposal with approval, saying, “Today’s announcement is welcome. As I have noted before, too many of this agency’s media policies have been custom built to support the business plans of SINCLAIR BROADCASTING. With this hearing designation order, the agency will finally take a hard look at its proposed merger with TRIBUNE. This is overdue and favoritism like this needs to end. I have voted to approve.”

Commissioner MICHAEL O'RIELLY's response was muted, first noting that he generally refrains from commenting on adjudicatory proceedings but since the proposal was leaked to the media, he wrote, "I have long stated that parties to merger applications are entitled to an answer from the Commission and have expressed deep objections to blindly sending decisions to the Commission’s Administrative Law Judge (ALJ).  Accordingly, I believe that to the extent there are HDOs, to garner my support they must include sufficient and defined timelines for the ALJ to conduct and process a hearing.  If included in the Sinclair/Tribune HDO, I am inclined to support it.  The ALJ process is in need of significant reforms, including putting an end to the interminable hearing.”

A statement from SINCLAIR, issued without attribution to any individual at the company, said that the company was "shocked and disappointed" by PAI's move and press reports that the Hearing Designation Order accuses the company of engaging in "misrepresentation or lack of candor," which SINCLAIR denies.  It said that the spinoff transactions it planned were disclosed to the FCC and "are consistent with structures that SINCLAIR and many other broadcasters have utilized for many years with the full approval of the FCC.... at no time have we misled the FCC in any manner whatsoever with respect to the relationships or the structure of those relationships proposed as part of the TRIBUNE acquisition."  Agreeing with O'RIELLY's objections to "blindly sending decisions" to the ALJ, SINCLAIR said that it is "prepared to resolve any perceived issues and look forward to finalizing our acquisition of TRIBUNE MEDIA."

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