Sinclair, Tribune, and the Deal the FCC Stopped
A $3.9 billion bet on broadcast consolidation collapsed when the FCC sent it to an administrative law judge — a procedural move that rarely ends well for the applicant.
The deal died over the divestitures proposed to get it past the FCC.
Photo: Vlada Karpovich / Pexels
The Bid and Its Ambitions
In May 2017, Sinclair Broadcast Group announced it would acquire Tribune Publishing's broadcast division, Tribune Media, for approximately $3.9 billion in cash and assumed debt. The deal would have given Sinclair control of Tribune Media's 42 television stations, adding them to Sinclair's then-roughly 170 stations and producing a group that reached an estimated 72 percent of American households. That figure alone signaled the regulatory problem to come: the FCC's national audience reach cap, set at 39 percent of television households under the agency's own rules, would require creative arithmetic to survive.
Sinclair's answer was a package of proposed divestitures. The company identified stations in overlapping markets where the combined entity would violate the FCC's duopoly rule, which historically barred a single owner from controlling two top-four-rated stations in the same market. The specific structures Sinclair proposed drew immediate scrutiny. Several of the proposed divestiture buyers were entities with longstanding ties to Sinclair — most notably Cunningham Broadcasting and a shell buyer in the Dallas market — raising the question of whether the divestitures were genuine sales or paper transactions designed to satisfy the letter of the rules while preserving Sinclair's operational control.
The web still runs at night in the plants that survived the consolidation.
Photo: Bornil Sarker / Pexels
The FCC's Procedural Move
The application had been filed at the FCC in June 2017, during the chairmanship of Ajit Pai, who had been an advocate for relaxing broadcast ownership restrictions. The FCC relaxed several ownership rules in November 2017, including the decades-old prohibition on newspaper-broadcast cross-ownership, moves that would, in theory, have eased Sinclair's path. Despite that regulatory environment, the divestiture proposals kept attracting staff-level concern.
In July 2018, the FCC voted to designate the Sinclair–Tribune merger application for a hearing before an administrative law judge — a step the agency takes when it finds that an application raises "substantial and material questions of fact" that cannot be resolved on the papers alone. The vote was unanimous. The FCC's designation order cited the specific sidecar arrangements: it found there was a genuine question whether Sinclair would retain de facto control over the purportedly divested stations, which would constitute an unauthorized transfer of control. Designation for hearing is not a denial, but in practical terms it functions as one — the process can take years, the outcome is uncertain, and the commercial logic of a pending merger cannot survive the delay.
Termination and Aftermath
Sinclair and Tribune Media terminated the merger agreement in August 2018, days after the FCC's designation order. Tribune Media subsequently filed suit against Sinclair for breach of the merger agreement, arguing that Sinclair's conduct during the regulatory process — specifically its handling of the divestiture proposals — had torpedoed the deal. The case was settled in May 2019 for $60 million paid by Sinclair to Tribune Media.
Tribune Media was then acquired by Nexstar Media Group later in 2019 in a deal valued at approximately $4.1 billion, creating what became the largest local television station group in the United States. The Nexstar transaction also required divestitures but cleared the FCC without a hearing designation.
The episode remains a precise illustration of how broadcast ownership rules interact with deal structure. Sinclair's reach figures were the visible problem, but it was the proposed remedy — divestitures to buyers with existing relationships to the seller — that the FCC found legally problematic. The Prometheus Radio Project had spent decades in court over precisely this kind of structural question: whether rule changes and rule evasions produce the same practical result. The Sinclair–Tribune docket answered, at least for one transaction, that the agency was watching.
