Tribune-Sinclair Merger Hits Snag As FCC Asks For Hearing

Questions surround the legality of Sinclair Broadcast's proposed $3.9 billion merger with Tribune Media Co., which owns Chicago's WGN-TV, the chairman of the U.S. Federal Communications Commission chairman said Monday. Ajit Pai, who heads the commission, is asking for the deal to go before hearing in front of an administrative law judge.

"Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction," Pai said in a statement posted online Monday.

Baltimore area Sinclair announced a deal to buy Tribune Media in March. If approved, the sale would create the largest TV broadcast group in the country combining Tribune's stations — including KTLA in Los Angeles — with the more than 170 outlets owned by Sinclair — which include WVTV in Milwaukee and WJLA in Washington, D.C.

At issue is Sinclair's plan to sell WGN and other stations in order to be in line with federal TV station ownership regulations, which say a company can't own outlets that reach more than 39 percent of U.S. TV households. Sinclair said it would sell WGN to an outside buyer, but the broadcast company would still manage the station even though it didn't own it.

RELATED: WGN-TV To Be Sold To Allow Sinclair-Tribune Media Merger Filing

Other Tribune stations would be sold to a company with strong ties to Sinclair. Another seven stations would be sold to 21st Century Fox, which is currently trying to work out a deal to sell some of its media assets to either Disney or Comcast.

"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 said. "When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction."

RELATED: Tribune Media Sold To Sinclair Broadcast Group For $3.9 Billion

In the past, sending deals before a judge at a hearing has killed those proposed sales. Paul Sweeney, a Bloomberg Intelligence analyst, told the news outlet that Pai's suggested delay could be the kiss of death for the Sinclair-Tribune merger.

"Historically, Sinclair has been very successful pushing the edge of the envelope with the FCC," he said. "In this case, it looks like the FCC is prepared to shove back."

Image via Tribune Media Co.