The head of the federal agency overseeing a multi-billion dollar mega-merger between two local television juggernauts had expressed reservation over the proposed transaction.
In a statement released Monday morning, Federal Communications Commission Chairman Ajit Pai said he was concerned that Sinclair Broadcasting Group would continue to control local stations divested as part of a proposed takeover of Tribune Media if the merger was given the go-ahead by the agency.
At issue is whether Sinclair would completely sever business relations with a number of stations it has agreed to sell in order to appease federal regulators who are scrutinizing the takeover deal.
“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,” Pai wrote.
One of those stations includes Tribune flagship broadcaster WGN-TV (Channel 9), which Sinclair agreed to sell to a Maryland-based car dealer if the merger was approved. Critics of the merger have argued that Sinclair would still control much of the station’s operations through a common practice known as a joint marketing agreement.
Under a joint marketing agreement, one company agrees to control some aspect of a television station owned by a second company. Typically, joint marketing agreements are limited to advertisement sales or news operations. But critics have argued that Sinclair’s structuring of the deal involving WGN would allow it to control virtually all aspects of the channel’s operations.
Pai said that loophole potentially violates the law; he recommended the agency refer the deal to an administrative law judge for review.
Since it was first proposed last year, Sinclair’s takeover deal of Tribune stations has come under fire from a number of watchdog groups concerned that the merger would give Sinclair too much control over local television outlets. Sinclair already has a number of joint marketing agreements with stations in smaller markets; a merger with Tribune would allow it to control at least one station in nearly every major market in the United States.
Sinclair has tried to ease these concerns by agreeing to sell off a number of underperforming stations in mid- to large markets. In April, Sinclair said it would sell a number of Fox affiliates to Fox Broadcasting if the deal with Tribune allows it to go through. The move could see the reduction in a number of union jobs at the Fox affiliates in Sacramento and Cleveland, according to documents obtained by last month.