WASHINGTON (CN) – Hours away from the midnight deadline it faces to walk away from the proposed $3.9 billion deal with Sinclair Broadcast Group, experts call it possible Wednesday for Tribune Media to seek another buyer.
Under the terms of their initial agreement, the parties will need to decide by the day’s end whether they will keep pursuing the deal.
Gigi Sohn, a distinguished fellow with the Georgetown Law Institute for Technology Law and Policy, said she hopes the companies will abandon the merger.
“I think really it’s the duty of both companies to walk away from this deal, particularly Tribune,” Sohn said in a phone interview.
The transaction had originally been on track to close by July 12 but hit a snag after FCC Chairman Ajit Pai expressed “serious concerns” about Sinclair’s divestment last month.
After a unanimous vote, the FCC referred the deal to an administrative law judge who will review it more closely.
Sinclair said at the time that it was “shocked” by the move. President Donald Trump meanwhile took to Twitter to weigh in.
“So sad and unfair that the FCC wouldn’t approve the Sinclair Broadcast merger with Tribune,” Trump tweeted on July 24. “This would have been a great and much needed Conservative voice for and of the People.”
Announced in May 2017, Sinclair’s acquisition of 42 Tribune-owned stations would give the conservative media giant control over 233 TV stations, expanding its reach to 72 percent of TV households.
Sinclair has since said it would divest 23 stations to stay under the 39 percent national TV ownership cap, but Trump-appointed Pai said back in July that the FCC has received evidence suggesting that Sinclair would still be able to control divested stations in practice.
The FCC also determined that Sinclair may have “engaged in misrepresentation and/or lack of candor in its applications with the commission.”
Though Sinclair denies any such bad behavior, Sohn at Georgetown said that the FCC draws the line at lying to the government, even while developing a reputation for withstanding bad behavior,.
“If you’ve got a chairman like Ajit Pai, whose been greasing the skids for this merger from the day he walked in the door, setting this for hearing, the proof must be really overwhelming,” Sohn said.
A vocal critic of the merger, Sohn signed onto a July 19 letter urging Tribune to abandon the deal.
She says Sinclair is likely trying to push ahead with the merger so long as the deal has President Trump’s support, but pushback from the Department of Justice and the appearance of impropriety are likely too much for Pai to get the transaction across the finish line.
In addition to the pending FCC hearing, the Department of Justice is also probing whether broadcasters – including Sinclair and Tribune – colluded to keep advertising prices high.
“I don’t know how anybody makes the case for this company to get bigger,” Sohn said.
Sohn noted that the merger was opposed not only by the public-interest community, but by broadcasters and the cable and telecommunications industries as well.
“I don’t think it’s good for the broadcast industry to have one gigantic company that’s so powerful,” Sohn added.
If the parties push ahead, they will face a months-long hearing process that could unravel the deal. When the FCC proposed a similar review of AT&T’s proposed acquisition of T-Mobile, the parties agreed to walk away from the transaction.
On Wednesday, Sinclair CEO Chris Ripley said in a statement that the company is working with Tribune “to analyze approaches to the regulatory process that are in the best interest of our companies, employees and shareholders.”
Ripley made the comments as the company announced its quarterly financial results.
Tribune declined to comment on the company’s plans Wednesday, referring to its remarks on July 19 where it called the FCC’s hearing order “troubling.”
“We will be greatly disappointed if the transaction cannot be completed, but will rededicate our efforts to running our businesses and optimizing assets,” Tribune said at the time. “Thanks to the great work of our employees, we are having a strong year despite the significant distraction caused by our work on the transaction and, thus, are well-positioned to continue maximizing value for our shareholders going forward.”