Sinclair, a Maryland-based company which is the largest owner of local news stations in the USA, is notorious for its right-wing, pro-Trump slant, and its unusual system of distributing slanted "must-run" content to its local stations to work into their broadcasts.
Tribune, FOX4's parent company, is withdrawing from its $3.9 billion buyout by Sinclair and it's filing a lawsuit against it, citing breach of contract.
'This uncertainty and delay would be detrimental to our company and our shareholders'.
"In light of the FCC's unanimous decision, referring the issue of Sinclair's conduct for a hearing before an administrative law judge, our merger can not be completed within an acceptable timeframe, if ever", said Tribune Media CEO Peter Kern.
Tribune's reversal Thursday came after federal regulators questioned Sinclair's honesty last month and requested a hearing about the matter.
Public Knowledge, an advocacy group that has been critical of the FCC under Pai, has been against a tie up between Sinclair and Tribune from the start.
Tribune "warned Sinclair repeatedly over many months" that its refusal to comply with required station divestitures was a breach of contract, according to the lawsuit, which seeks to recover at least $1 billion in damages.
Sinclair has become a significant outlet for conservative perspectives.
There was still a slim chance that Sinclair could save the merger because the FCC referred the deal to an administrative law judge.
The FCC did not immediately comment on Thursday.
Kern told employees in an email reviewed by Reuters that it was not clear what was next for Tribune.
"We're obviously disappointed", Tribune CEO Peter Kern said on a conference call Thursday morning. Sinclair would have stations in Philadelphia, Washington, DC, Virginia, Indianapolis, Seattle, Sacramento, Milwaukee, Kansas City, Des Moines, Denver, Dallas, Houston, New Orleans, Memphis, Miami, Greensboro, Richmond, Des Moines, San Diego, Salt Lake City, Oklahoma City, St. Louis and more.
Tribune pointed to the same problems that the FCC found in Sinclair's proposal to divest some stations in order to stay under federal ownership limits.
On Wednesday, Sinclair said it remained in discussions with Tribune about how to secure FCC approval of the deal, which has drawn wide-ranging criticism from across the political spectrum for how it would give the company access to so much of the nation's broadcast market.
A survey by the Washington Post in December 2016 showed that the coverage by Sinclair-run news outlets was "disproportionately" favorable to Trump in the election year.