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FCC accuses Sinclair of trying to mislead regulators over Tribune merger
The Federal Communications Commission (FCC) has accused Sinclair Broadcast Group of trying to deceive regulators as the media giant sought approval of its $3.9 billion merger with Tribune Media.
In a filing released on Thursday, the agency questioned the company's plan to sell off a number of local television stations in order to bring the merger in compliance with media ownership regulations.
One of the deals that the FCC singled out involved Sinclair selling the Chicago station WGN-TV to Steven Fader, a Maryland businessman with ties to Sinclair's executive chairman, David Smith.
Under the terms of the deal, Sinclair would sell the station for $60 million, a price the FCC calls "far below market value," but would still retain control of many of its operations and programming.
"Specifically, we question the legitimacy of the proposed sale of such a highly rated and profitable station in the nation's third-largest market to an individual with no broadcast experience, with close business ties to Smith, and with plans to own only the license and minimal station assets," the FCC filing reads.
The agency also accused Sinclair of not fully disclosing the business relationship between Smith and Fader. Fader is the CEO of a Maryland auto dealership that Smith has a controlling interest in.
A spokesman for Sinclair did not respond when asked for comment, but the company denied making any misrepresentations to the agency.
"Tribune Media has now had the opportunity to review the FCC's troubling Hearing Designation Order," the company said in a statement. "We are currently evaluating its implications and assessing all of our options in light of today's developments."
The filing released Thursday was an order to send the Sinclair-Tribune deal before an administrative law judge to determine the propriety of the transactions - a process that many believe could doom the merger.
Thursday's order caps off a week that has seen a stunning shift regarding the right-wing broadcasting company, which many believed had a reliable ally in FCC Chairman Ajit Pai (R).
Pai's tenure as head of the agency has been marked by a wholesale effort to dismantle media ownership restrictions that would have impeded deals like the Sinclair-Tribune merger. But on Monday, Pai released a statement saying he had "serious concerns" about whether the merger was legal and circulated the proposed order to send it before an administrative law judge.
On Wednesday, the FCC approved the order in a 4-0 vote.
"For too long the @FCC has twisted & bent its policies to serve the business plans of Sinclair Broadcasting," Commissioner Jessica Rosenworcel, the lone Democrat on the commission, said in a tweet. "As I've said before, this is not right. I'm glad my colleagues now agree & have supported halting the Sinclair-Tribune merger with this hearing."
Update at 5:27 p.m.