Inspector General Conducting Probe of Timing of FCC Actions and Sinclair Deal

Sinclair Broadcast Group
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WASHINGTON — The FCC’s inspector general is conducting an investigation into a series of FCC actions last year, and how they benefited Sinclair Broadcast Group in the midst of seeking regulatory approval for its acquisition of Tribune Media.

The confirmation of the probe came from Rep. Frank Pallone (D-N.J.), the top Democrat on the House Energy and Commerce Committee. Democrats had requested the investigation, and sources said that the inspector general had informed them that one had been opened.

“I am particularly concerned about reports that Chairman [Ajit] Pai may have coordinated with Sinclair to time a series of commission actions to benefit the company,” Pallone said in a statement.

Sinclair’s $3.9 billion deal would make them the largest broadcaster in the country, reaching about 72% of the country,

But the size of the transaction would not have been possible had the FCC not voted along party lines in April to restore a rule that allows companies to “discount” the reach of their UHF holdings. That rule — called the “UHF discount” — allows major station groups to bulk up and still fall within media ownership limits.

Sinclair announced its merger with Tribune several weeks later.

Democrats and public interest groups have questioned the timing of the rule changes, as well as Pai’s meetings with representatives of the company. Commissioner Jessica Rosenworcel, a Democratic appointee, called for an investigation at a congressional hearing in October.

An FCC spokesman said, “Given that the FCC under Chairman Pai’s leadership recently proposed a $13 million fine against Sinclair, the largest fine in history for a violation of the Commission’s sponsorship identification rules, the accusation that he has shown favoritism toward the company is absurd.

“Moreover, Chairman Pai has for many years called on the FCC to update its media ownership regulations to match the realities of the modern marketplace.  The chairman’s actions on these issues have been consistent with his long-held views.  Considering the strong case for modernizing these rules, it’s not surprising that those who disagree with him would prefer to do whatever they can to distract from the merits of the reforms that the FCC has adopted.”

David Hunt, the inspector general, has said he would not comment on whether there is an investigation. The inspector general acts as a watchdog to various government agencies. The New York Times first reported on Pallone’s confirmation of the probe.

Sinclair’s merger is still awaiting approval from the Justice Department and the FCC. Even with the relaxed media ownership rules, the combined Sinclair-Tribune will be forced to sell about 10 stations. Recent filings have suggested that Sinclair may be seeking waivers under a new FCC rule that would allow common ownership of more than one top-four station in a market on a case by case basis.

Demand Progress, a public interest group, is calling on Pai to recuse himself from the Sinclair-Tribune review.

“To ensure the integrity of the FCC’s review process, the commission should take no action on this mega-merger until the conclusion of the inspector general’s investigation,” said Kurt Walters, the group’s campaign director.

Pai has defended the review of the Sinclair-Tribune merger in a letter to House Democrats last fall.

Pai championed the restoration of the UHF discount, reversing a decision made by the FCC to do away with it when the agency was controlled by Democrats under President Barack Obama. Pai’s rationale was that the elimination of the UHF discount had to be considered along with other media ownership regulations that cap the number of stations that an entity can own to no more than 39% of the country.

It’s unclear the timeframe for the inspector general’s investigation. In 2015, Republicans asked for an inspector general investigate whether then-Chairman Tom Wheeler was unduly influenced by President Barack Obama’s support of reclassifying internet service as a common carrier, known as “Title II” in regulatory speak. More than 14 months later, the inspector general concluded that there was no evidence of impropriety or that FCC staff was swayed by the White House, according to a document obtained by Motherboard.