Sinclair deal puts heat on FCC

Sinclair deal puts heat on FCC
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The proposed acquisition by Sinclair Broadcasting Group of Tribune Media Company is inflaming criticism of the Federal Communications Commission (FCC), which helped pave the way for the deal by relaxing media ownership restrictions.

Sinclair announced earlier this month that it had reached an agreement to buy Tribune for $3.9 billion. The announcement came several weeks after the FCC voted to ease restrictions on the amount of local television stations that broadcasters can own.

Broadcasters are now limited to serving 39 percent of the country’s households. Last month, the FCC reinstated what’s known as the UHF discount, which makes stations that used to broadcast on ultra-high frequency count less toward the 39 percent ownership limit.

Without the discount, Sinclair already reaches 38 percent of U.S. households, according to an analysis from Fitch Ratings. Once the discount goes into effect, the Fitch study finds, Sinclair’s share will drop to 25 percent — giving the company more room to buy local television stations.

The deal with Tribune is still likely to push Sinclair over the media limit, and the company has said that it will explore ways to avoid exceeding the cap.

Activists immediately pounced on the arrangement after the deal was announced. Free Press CEO Craig Aaron called it a “scandal,” and John Bergmayer, a senior counsel at Public Knowledge, urged the Department of Justice and the FCC to scrutinize the deal.

Free Press and several other groups are trying to block the discount from going into effect. They petitioned the FCC to hold off on implementing the rule and asked a federal court to review it, arguing that the Republican majority at the agency did not have sufficient reason to reinstate the discount, which the FCC repealed last year under the Obama administration.

And a trio of House Democrats — Reps. Doris Matsui (Calif.), Mike Doyle (Pa.) and Anna Eshoo (Calif.) — called on the House Energy and Commerce Committee to hold a hearing to scrutinize the acquisition and the FCC’s actions.

FCC Chairman Ajit Pai has said that he agrees that the UHF discount has outlived its usefulness but argues that it shouldn’t be modified or removed without also reviewing the overall ownership limit, which he has promised the FCC will do.

Critics say that if the Sinclair-Tribune deal is allowed to go through, it could lead to higher costs for consumers and a stifling of independent media voices.

“The fundamental concern is that no media company should be that big,” said Andrew Jay Schwartzman, a law professor at Georgetown University and part of the legal team seeking to block the UHF discount.

“Beyond that, Sinclair gaining this kind of scope is especially troublesome. It has an established track record of shortchanging its viewers by cutting costs, duplicating programming on multiple stations in a market and placing profits ahead of service.”

Sinclair did not respond to requests for comment. The FCC declined to comment.

Some critics have even questioned whether Sinclair is getting special treatment because of its conservative leaning. The company faced criticism last year after Politico reported that President Trump’s adviser and son-in-law, Jared Kushner, had bragged behind closed doors about an arrangement Sinclair had with the Trump campaign for better coverage.

Sinclair reportedly secured one-on-one interviews with then-candidate Trump by promising that the interview would be broadcast without any commentary. Scott Livingston, the company’s vice president of news, told Politico at the time that the offer was also extended to Democratic nominee Hillary Clinton’s campaign and that her running mate, Sen. Tim Kaine (D-Va.), took advantage of the arrangement.

A month ago, Sinclair hired Boris Epshteyn, a former Trump administration aide, as the network’s chief political analyst.

“Sure looks like a quid pro quo: friendly coverage and full employment for ex-Trump mouthpieces in exchange for a green light to get as big as Sinclair wants,” Aaron, the Free Press CEO, said in a statement after the deal was announced.

“I feel terrible for the local journalists who will be forced to set aside their news judgment to air Trump-administration talking points and reactionary commentaries from Sinclair’s headquarters. This deal would have been DOA in any other administration, but the Trump FCC isn’t just approving it; they’re practically arranging it.”

While the FCC’s chairman was appointed by Trump, the agency operates independently from the White House.

Some advocates argue the UHF discount is part of a pattern for the Trump administration when it comes to mergers. Despite Trump’s promises on the campaign trail that he would crack down on media consolidation, many in the industry believe that conditions are now ripe for mega-mergers.

“We’re very optimistic about this new FCC and the leadership of Ajit Pai,” Sinclair CEO Christopher Ripley told investors in February, according to Bloomberg News. “And in terms of what that could lead to on the consolidation side, we definitely anticipate that more consolidation will happen. In fact, we think it’s a necessary activity.”

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