Media Ownership Review May Delay Sinclair-Trib Action

FCC Chairman Ajit Pai has told an opponent of Sinclair Broadcast Group Inc.’s proposed purchase of Tribune Media Inc. that the agency may review media ownership rules before ruling on the $3.9 billion deal, something that could delay a decision on the merger, according to Bloomberg.

“Ajit Pai told me in my meeting that he has not decided to approve the merger first, that he may conduct a review of the ownership cap,"  Christopher Ruddy, chief executive officer of Newsmax Media Inc., said in an interview Friday. “I can confirm to you on the record that he told me that he had not decided and that he was open to doing the review first. And I encouraged him to do it."

Ruddy said Pai made his statement in a Sept. 27 meeting. The Newsmax chief said the merger would allow too much media concentration that could crowd out independent voices. Newsmax offers a TV channel that appears on cable systems and online.

A review of the complex ownership rules could take months, delaying the deal that as proposed in May would create a broadcast company exceeding current ownership limits, with 233 stations offering service to more than 70 percent of U.S. viewers.

Sinclair, based in Hunt Valley, Maryland, wants to buy 42 TV stations in 33 markets from Chicago-based Tribune. The company would have a presence in 108 markets, according to a Sinclair presentation to investors touting the company after the deal as “the largest broadcasting group.”

Sinclair announced the deal 18 days after Pai led the FCC to restore an obsolete rule that lets companies count just half the audience for some stations. Sinclair told investors it would have stations covering 72 percent of U.S. households, and told told the FCC the company would reach 45.5 percent of the national audience when counting half the audience for some stations. The limit is currently 39 percent.

The FCC last month told Sinclair the proposed deal would exceed the national TV ownership limit, and also violate of rules on local TV ownership in 10 markets where the broadcaster would have multiple stations. The company in an Oct. 5 filing said it would need to sell two TV stations to meet the national limit, and didn’t say which outlets it might sell.

At the Sept. 27 meeting with Pai, Ruddy and a consultant expressed their opposition to the deal, questioning what they called “a rush to approve” and saying the combination raises concerns over media concentration, according to a disclosure filing.

Pai in April said he’d begin a proceeding this year to examine media ownership rules; so far the agency hasn’t acted.