The company said it has been completely transparent in dealings with the commission over its proposed Tribune merger. Even worse, Reuters reported that it had seen a draft of the hearing order that suggested that the Sinclair merger proposal may “involve deception” and that is a violation that could not only scuttle the Tribune deal, but also could result in the loss of all its station licenses.
A “shocked and disappointed” Sinclair Broadcast Group on Monday evening strongly denied that it had deceived the FCC with its proposal to spin off stations to comply with the agency’s ownership limits and win approval of its long-pending $3.9 billion merger with Tribune Media.
“[A]t no time have we misled the FCC in any manner whatsoever with respect to the relationships or the structure of those relationships proposed as part of the Tribune acquisition,” Sinclair said.
“Any suggestion to the contrary is unfounded and without factual basis.
“We are prepared to resolve any perceived issues and look forward to finalizing our acquisition of Tribune Media.”
The first shock to Sinclair came Monday morning when FCC Chairman Ajit Pai released a statement that he had evidence that Sinclair would “in practice, if not in name, control” stations that it had said it would divest to comply with the rules.
And in light of that evidence, Pai said he had circulated an item to the other three commissioners asking for their vote to hold an administrative hearing on Sinclair and the merger.
“When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction,” the chairman said.
That sent shares of Sinclair and Tribune tumbling as analysts and investors for the first time were faced with the prospect that the merger may never close.
A full-blown hearing before an administrative law judge could easily take a year or more.
The second shock came Monday afternoon when Reuters reported that it had seen a draft of the hearing order that suggested that the Sinclair merger proposal may “involve deception.”
Misrepresentation or lack of candor are capital crimes at the FCC — that is, they are violations that could lead to a broadcaster’s inability to hold any broadcast licenses.
So, suddenly, Sinclair has more than the Tribune merger to worry about.
“Throughout the FCC review process of this transaction, we have had numerous meetings and discussions with the FCC’s Media Bureau to make sure that they were fully aware of the transaction’s structure and basis for complying with FCC rules and meeting public interest obligations,” Sinclair said.
“These structures are consistent with structures that Sinclair and many other broadcasters have utilized for many years with the full approval of the FCC.
“During these discussions and in our filings with the FCC, we have been completely transparent about every aspect of the proposed transaction.
“We have fully identified who the buyers are and the terms under which stations would be sold to such buyer, including any ongoing relationship we would have with any such stations after the sales. We have filed all relevant agreements documenting such terms as required by FCC rules.”