‘Serious concerns’ at FCC threaten to halt Sinclair-Tribune merger

Update: The FCC voted unanimously to adopt the Hearing Designation Order, meaning the merger is officially on hold until further notice; the order itself, which should contain details around what may be expected of Sinclair in order for the business deal to be approved, will be published tomorrow.

The FCC has been under serious scrutiny by citizens, advocates and politicians alike due to its laissez-faire attitude toward, in particular, the proposed Sinclair Broadcasting merger with Tribune. But the agency is showing some backbone today with a no-nonsense declaration that the merger can’t go through unless a few “serious concerns” are addressed. It’s not the outright disapproval many have recommended, but it’s better than an unconditional green light.

In a short memo posted to the agency’s site, FCC Chairman Ajit Pai explained that even under his notoriously (or blessedly, depending on your politics) deregulatory regime, the proposed deal is not acceptable as is. Here it is in full:

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.

The issue is that the proposed Sinclair-Tribune merger would result in a company that controls a huge amount of TV stations — far more than is healthy for a single company. This was demonstrated effectively by a viral video demonstrated earlier this year showing news anchors at Sinclair stations reading the exact same script without acknowledging that it was under the direction of their owner. (Ironically, the script was regarding ethics and accountability in the media.)

In order to make the deal more palatable, Sinclair offered to divest itself of a number of stations. But these promises appear to have been “less than candid,” as former FCC counsel Gigi Sohn put it; “This transaction would place far too many free over-the-air broadcast stations and far too much power in the hands of one company,” she concluded.

Chairman Pai, surprisingly, appears to have come to the same conclusion. Perhaps Sinclair’s plans to puppeteer these stations were transparent, or perhaps there are too many eyes on the commission right now to let something like this slide, but whatever the case, the merger can’t go forward without FCC approval — and now FCC approval won’t go forward without this hearing and revised divestiture plans.

This is a pleasant surprise for critics of the FCC who have repeatedly argued that the agency isn’t just soft on broadcasters and other big cable and internet businesses, but may be effectively in bed with them.

“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,” said Commissioner Rosenworcel in a statement accompanying and applauding the chairman’s. “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.”

The FCC’s multi-part “modernization” of rules governing media companies has contributed powerfully to the feeding frenzy of consolidation we’ve seen over the last couple of years, and the Sinclair-Tribune merger is just one of many deals that watchdogs have warned about. But it seems that this one at least will get some consumer-positive checks in the near future.