FCC Chairman Ajit Pai Refers Sinclair-Tribune Merger to Hearing Over "Serious Concerns" About Sham Divestitures and Misrepresentation

On July 16, 2018, FCC Chairman Ajit Pai announced “serious concerns” about Sinclair Broadcast Group’s proposed $3.9 billion acquisition of Tribune Media and referred the merger to an administrative law judge for a hearing—an extremely rare action that effectively killed the deal. The FCC’s 4-0 vote to refer the merger came amid evidence that Sinclair had failed to “fully disclose facts” about proposed station divestitures and maintained undisclosed business relationships with proposed buyers, raising questions about whether the divestitures were shams designed to circumvent ownership limits while Sinclair retained de facto control.

The proposed merger would have created an unprecedented media giant: Sinclair already owned or operated 173 broadcast television stations in 81 markets, making it the largest local news provider in the country, while Tribune owned or operated 42 broadcast television stations in 33 markets. The combined entity would have reached almost 72% of American households—far exceeding previous ownership concentration limits. The deal would have given Sinclair control over major stations including WGN Chicago, WPIX New York, KTLA Los Angeles, and numerous Tribune stations in swing states.

The FCC’s concerns centered on suspicious divestitures that appeared designed to evade ownership rules. Sinclair proposed to sell WGN Chicago to Steven Fader, a Maryland auto dealer and longtime business associate of Sinclair Executive Chairman David Smith. The FCC found that Sinclair “did not fully disclose facts,” including “the pre-existing business relationships between Fader, Smith, and Sinclair nor the full entanglements between Cunningham, Smith, and Sinclair.” The proposed sales prices appeared to be below market rates, and the close personal ties between Smith and the proposed purchasers raised serious questions about whether Sinclair would retain de facto control over the supposedly divested stations.

The merger review occurred amid intense public scrutiny of Sinclair’s propaganda operations. In March 2018, just months before the FCC’s decision, a viral Deadspin video exposed how Sinclair forced anchors at dozens of stations to read identical “fake news” scripts—publicly demonstrating Sinclair’s centralized control over supposedly independent local news stations. Media watchdog groups had documented Sinclair’s “must-run” segments featuring former Trump White House aide Boris Epshteyn, which aired propaganda supporting the Trump administration across all Sinclair stations from 2017-2019.

Sinclair’s track record of “running public affairs shows and commentary segments in local newscasts supportive of conservative platforms induced concern over possible imperiled editorial independence among the Tribune stations, with said programming potentially used by Sinclair for favoritism of Republican presidential and congressional candidates in swing states,” according to Congressional Research Service analysis. The proposed merger would have given Sinclair control over local news in numerous swing states during the 2018 midterm elections and the 2020 presidential election.

Chairman Pai himself faced controversy over the deal. Prior to the merger announcement, Pai had reversed several decades-old FCC policies pertaining to broadcast ownership in April 2017, leading critics to speculate that Pai instituted those changes specifically to benefit Sinclair. Weeks after Pai’s deregulatory changes, Sinclair announced the Tribune deal—an acquisition that would not have been possible under the previous rules. The FCC’s inspector general launched an investigation into whether Pai spearheaded the rules change “in cahoots with Sinclair Broadcasting,” examining potential coordination between the FCC chairman and the media conglomerate seeking regulatory approval.

Tribune Media terminated the merger agreement on August 9, 2018, following the FCC’s referral to a hearing, and simultaneously filed a $1 billion lawsuit against Sinclair, alleging that Sinclair’s “misconduct” torpedoed the deal. The FCC later fined Sinclair $48 million for disclosure violations in connection with the failed merger. The collapse of the deal prevented Sinclair from achieving market dominance that would have been unprecedented in American broadcasting history and limited—at least temporarily—the consolidation of local news under a single politically-coordinated media conglomerate.

The Sinclair-Tribune merger failure represented a rare instance where regulatory review, public pressure, and documented propaganda operations combined to block further media consolidation. However, it also demonstrated how close the United States came to allowing a single politically-aligned broadcaster to control local news reaching nearly three-quarters of American households—a concentration of media power that would have posed an existential threat to democratic discourse and local journalism.