Sinclair May Try to Keep More Major Stations as Decision on Tribune Deal Looms

Sinclair Broadcast Group
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WASHINGTON — With anticipation that the Department of Justice will eventually give approval to Sinclair Broadcast Group’s acquisition of Tribune Media, what’s being watched now is just what stations the combined broadcasting giant will be forced to sell to secure a government green light.

Sinclair needs Justice Department and FCC approval for the $3.9 billion deal, in which it would have unprecedented reach of 72% of the country.

Recent filings with the FCC suggest that it will seek waivers to own more than one top-four station in a market.

The FCC has prohibited such common ownership, but newly relaxed ownership rules passed in November allow companies to get waivers on a case-by-case basis. On Jan. 22, Sinclair’s Rebecca Hanson and a legal rep, Miles Mason, met with FCC staff and discussed the case-by-case review and “the types of information that might be presented” to obtain such a waiver.

Sinclair has said that it expected to have to sell stations in 10 markets to comply with FCC ownership rules, and has been in talks with 21st Century Fox about buying more affiliates in markets like Denver and Seattle.

For now, the FCC has paused its review of the merger until Sinclair files its own plan to divest stations.

The deal has drawn fire from public interest groups and Democrats in part because of the “must run” political commentary and pre-packaged news segments. That has included opinion pro-Trump segments from Boris Epshteyn, a former campaign and administration official.

But the deal has also been sharply criticized from those on the right, including Chris Ruddy, the CEO of Newsmax and a friend of President Donald Trump’s. He has been particularly critical of the way the FCC has changed and relaxed some of its broadcast rules that has allowed the Sinclair-Tribune transaction to move forward, a process that he says “stinks.” Two other outlets in the conservative news space, Glenn Beck’s The Blaze and One America News Network, also have weighed in against the deal.

Last week, Tom DeLay, the former Republican House majority leader, also came out against the merger, writing in an op-ed in Politico that, as much as it would expand the power of a conservative broadcaster, the merger “could well backfire.”

“Don’t get me wrong: I appreciate the conservative perspective of Sinclair, and support its First Amendment right to espouse its views,” wrote DeLay, who is a frequent guest commentator on Newsmax. “We should tread carefully when regulations could limit speech. But the spectrum Sinclair utilizes to broadcast is limited and this transaction would set a terrible precedent by opening the door for ABC, CBS, and NBC to also buy many more TV stations. At that point, nothing can stop liberal Northeast corporate executives from telling homes in the heartland what to think.”

Moreover, he also said Justice Department approval of the Sinclair-Tribune deal could undermine the Antitrust Division’s own case against the AT&T-Time Warner transaction.

“By giving Sinclair a free pass, Trump’s DOJ would be gifting AT&T’s lawyers with a powerful argument that DOJ’s selective enforcement is not only arbitrary but also illogical: AT&T-Time Warner poses a risk to consumers and competition, but Sinclair-Tribune does not?” DeLay wrote.

Sinclair has defended the deal as giving it the scale to produce more local content and other programming options, citing competition from the broadcast networks and fast-growing over-the-top services. Defenders of the transaction have dismissed the concerns coming from conservative outlets as motivated by competitive interest.

Yet beyond the interest in the merger from conservative media, critics say the transaction will actually jeopardize the local nature of station programming, as Sinclair will have the reach to mandate news and other content across all of its outlets.

The government’s review of the transaction has taken longer than expected, the FCC’s pause on its review has given critics more time to weigh in.

The Coalition to Save Local Media, a group that includes representatives from NABET-CWA, the Sports Fan Coalition, and other trade associations, met with FCC officials on Feb. 2 and argued that the merger would give Sinclair “anti-competitive leverage” in retransmission consent negotiations.

FCC Commissioner Jessica Rosenworcel, a Democratic appointee, wrote in an op-ed in the Des Moines Register that “Washington should not be clearing the way for big companies to overwhelm local media markets.” She noted that the company would own nearly a dozen stations in the state, which also has political significance as a haven for prospective presidential candidates campaigning for the first-in-the-nation caucuses.

At a congressional hearing last October, Rosenworcel charged that a series of FCC moves seemed “custom built” to benefit Sinclair and merited an investigation, and a number of Democrats called for the agency’s inspector general to open a probe. The inspector general, David Hunt, declined to say whether he has moved forward on an investigation.

Ruddy also thinks there needs to be an investigation of the process.

He questions the timing of a number of moves made by the FCC, since Ajit Pai became chairman, that benefit Sinclair. Those include not just the relaxation of the media-ownership rules, but a vote to restore the so-called UHF discount, in which station groups are allowed to own many more stations because of a more advantageous way that the FCC calculates their reach. The FCC voted to restore the discount on April 20, and the Sinclair-Tribune merger was announced on May 8.

Ruddy also cited the FCC’s decision to move forward on a next-generation TV standard, for which Sinclair holds patents.

“Before they conclude the Sinclair merger, there needs to be an open and transparent process at the FCC,” he told Variety.

He said one problem has been that so much else is consuming attention among lawmakers. “It is flying under the radar because of all the things going on in Washington,” he said.

The FCC’s ownership rules changes are now being challenged in court by a number of public interest groups, while Sinclair, Tribune, and other station groups have argued in court filings that the changes are needed in the changing media landscape.

Pai has defended the FCC’s review of the merger, and an FCC spokeswoman has called the allegations of favoritism “baseless.”

“The Chairman is sticking to his long-held views, and given the strong case for modernizing these rules, it’s not surprising that that those who disagree with him would prefer to do whatever they can to distract from the merits of his proposals,” the spokeswoman said in November.

In the face of calls by Democrats for an investigation, he got some support from Gordon Smith, the president of the National Association of Broadcasters. Smith noted that the policy changes of the past year have long been top agenda items among all broadcasters.