Federal Communications Commission (FCC) Chairman Ajit Pai issued a statement Monday morning expressing “serious concerns” about the proposed $3.9 billion merger of Sinclair Broadcast Group Inc. (NASDAQ: SBGI) and Tribune Media Co. (NYSE: TRCO).

Sinclair already had found buyers for its WPIX and WGN stations in New York and Chicago, respectively, and had proposed spinning off one of the two top-four stations it would own in seven other markets if the deal were to be completed. Buyers for other Sinclair stations were also lined up.

None of this is enough for Pai, who said in his statement:

The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.

Pai goes on to say that in cases such as this the law requires a hearing to investigate the disputed issues. To that end, he is circulating among his fellow commissioners a draft order that enumerates issues “involving certain proposed divestitures for a hearing in front of an administrative law judge.”

As of Friday’s close, Sinclair and Tribune Media posted identical market caps of $3.37 billion. In the noon hour Monday, Sinclair’s valuation had dropped to $3.21 billion and Tribune Media’s had plummeted to $2.90 billion.

The FCC’s comment period on the proposed merger ended last Thursday, and Pai didn’t waste any time issuing his statement. Investors are rightly concerned that the FCC’s business-friendly chairman’s concerns about the deal indicate that Sinclair will be forced to withdraw its bid.

The proposed merger has drawn fire from both political conservatives and liberals. The American Civil Liberties Union has encouraged the FCC to reject the deal, as has the conservative Parents Television Council. The two groups’ reasoning is similar: both object to remote corporate control that threatens to result in more uniform content than does more local control.

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