FCC chief stands by Sinclair decision despite criticism from Trump

Ajit Pai, the Republican chairman of the Federal Communications Commission (FCC), said on Wednesday that President Trump’s criticism of his agency would not affect its decision to reject Sinclair Broadcast Group’s proposed merger with Tribune Media.

“I stand by our decision,” Pai said during an oversight hearing before the House Energy and Commerce Committee’s technology and communications panel.

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Pai refused to directly address Trump’s criticism of the agency after it decided last week to subject the $3.9 billion merger to an administrative law proceeding, a process that will likely doom the deal’s chance of obtaining regulatory approval.

On Tuesday night, Trump blasted the FCC, saying it was “unfair” of regulators to crack down on the deal.

“So sad and unfair that the FCC wouldn’t approve the Sinclair Broadcast merger with Tribune,” the president wrote. “This would have been a great and much needed Conservative voice for and of the People. Liberal Fake News NBC and Comcast gets approved, much bigger, but not Sinclair. Disgraceful!”

A spokeswoman for Comcast declined to comment on the president’s tweet.

The tweet only added to the controversy over the ambitious merger, which would see conservative-leaning broadcaster Sinclair take control of more than 200 television stations, reaching more than 60 percent of households.

Pai’s Democratic predecessor as FCC chairman, Tom Wheeler, accused Trump of trying to tip the scales of the upcoming administrative law proceeding in Sinclair’s favor.

“The Trump tweet not only makes the Commission’s job adjudicating the matter even more complicated; the President’s inappropriate, out-of-channels involvement possibly taints the whole proceeding,” Wheeler said in a blog post Wednesday.

Sinclair has viewed both Pai and Trump as reliable allies in the past. The Republican-controlled FCC has worked to clear regulatory roadblocks that would have impeded the merger, and Democrats in Congress have repeatedly accused Pai of showing favoritism to the company.

But the merger’s chances of being approved unraveled when Pai said last week that he had “serious concerns” about the legality of the mergers after the companies proposed some questionable deals to sell off stations in order to comply with federal media ownership limits.

The FCC accused Sinclair of trying to deceive regulators over the proposed sales, several of which were to buyers with business ties to the company for below-market prices. Those side deals also would have allowed Sinclair to retain significant control over the stations’ operations and programming, causing Democratic critics to worry that it would allow the broadcaster to more widely disseminate its pro-Trump editorial programming.

One of the proposals involved selling a highly valuable Chicago station to the CEO of a Maryland auto dealership in which David Smith, Sinclair’s executive chairman, owns a controlling stake.

“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 wrote in an order released last week.

Under Pai, the FCC has also been shaking up the media landscape with changes to its broadcast ownership rules. Those changes, with the Sinclair deal looming overhead, have put Pai under intense scrutiny.

Wednesday’s hearing coincided with a federal court throwing out a legal challenge to one of the FCC’s media ownership orders, which critics say was tailored toward getting the Sinclair merger approved.

The FCC had reinstated a loophole giving broadcasters like Sinclair the ability to buy up more local television stations without running afoul of the national media ownership restriction against serving more than 39 percent of the country’s television audience.

The court’s ruling likely came too late to save the Sinclair deal, but Democrats are concerned about implications it could have for media consolidation as other companies explore potential megadeals.

Pai and the agency’s other Republicans have also voiced support for raising the national media ownership limit.

The urgency with which they’ve rolled back regulations to ease media industry consolidation has led critics to accuse Pai and his GOP colleagues of improperly favoring Sinclair, an accusation they have all denied.

Earlier this year, it was revealed that the FCC’s inspector general had opened an investigation into whether the ownership rules changes were intended to benefit Sinclair.

Pai’s decision to reject the merger surprised his critics. Many of them are cautiously optimistic the deal will not go through.

Sinclair has given no sign it will drop its merger plans. That will certainly keep Pai on the hot seat with critics of the deal and its supporters, as will Trump’s tweet.

Wheeler said Trump’s tweet would inject new uncertainty into the merger fight.

He said it remained to be seen whether the administrative review of the merger was “anything more than a smokescreen designed to focus attention on three specific license transfers while the remaining 39 stations sail through to make the largest broadcaster even bigger.”

“The recent Trump tweet would seem to support such approval,” said Wheeler.

Updated at 5:05 p.m.