By David Shepardson
WASHINGTON (Reuters) – Shares in Sinclair Broadcast Group Inc fell by 1.6% after the U.S. Federal Communications Commission disclosed it has opened an investigation into whether the company misled the agency in its failed effort to win approval for a $3.9 billion bid to purchase Tribune Media Co.
In a June 25 letter to Sinclair posted Wednesday on the FCC’s website, the government agency’s media bureau directed Sinclair to answer a series of questions by July 9.
On Thursday, the letter had been removed from the FCC’s website.
The FCC did not explain why the letter had been removed but in a statement Thursday said the “Media Bureau is in the process of resolving an outstanding issue regarding Sinclair’s conduct as part of the last year’s FCC’s review of its proposed merger with Tribune. The Bureau believes that delaying consideration of this matter would not be in anyone’s interest.”
Sinclair said Thursday “this is part of an ongoing discussion initiated by Sinclair to work with the FCC to respond to certain allegations raised” last year by the FCC when it referred the issue for a hearing.
Sinclair could face fines from the FCC. In 2017, the FCC fined Sinclair $13.38 million for failing to disclose that programing on local TV stations that looked like news stories was sponsored by a cancer institute.
FCC Commissioner Jessica Rosenworcel, a Democrat, said Thursday that “any settlement negotiated behind closed doors will leave us with more questions than answers about one of the nation’s largest broadcasters. The FCC should hold a hearing in public on these questions and do it now.”
Tribune terminated the sale of 42 TV stations in 33 markets to Sinclair, which has 192 stations, in August. A month earlier the FCC referred the deal for a hearing, questioning Sinclair’s candor over the planned sale of some stations and suggesting Sinclair would effectively retain control over them.
An administrative judge in March dropped plans for a hearing into allegations that Sinclair may have misled regulators. Judge Jane Halprin added however that the allegations “are extremely serious charges that reasonably warrant a thorough examination.”
U.S. President Donald Trump backed the deal and its collapse potentially ended Sinclair’s hopes of building a national conservative-leaning TV powerhouse that might have rivaled Twenty-First Century Fox Inc’s Fox News.
Nexstar Media Group Inc said in December it will buy Tribune in a $4.1 billion deal that would make it the largest regional U.S. TV station operator. The deal is still under review by the Justice Department and the FCC.
In May, Walt Disney Co said it would sell its interests in 21 regional sports networks and Fox College Sports to Sinclair for $9.6 billion.
(Reporting by David Shepardson; Editing by Lisa Shumaker)