With Sinclair Broadcasting’s game-changing acquisition of Tribune Media likely just weeks from final approval, the Federal Communications Commission’s independent watchdog is reportedly investigating dealings between Sinclair and FCC Chairman Ajit Pai.
The New York Times disclosed the probe, which it said has been in motion since December but had not previously come to light, citing confirmation from Rep. Frank Pallone of New Jersey, the top Democrat on the committee overseeing the FCC. The inspector general’s office, the paper noted, does not typically confirm or deny reports of what matters it is investigating. Bloomberg followed up on the Times with its own report, citing a lawmaker whose identity it did not reveal.
At the heart of the reported probe is the series of events that led up to Sinclair declaring last April that it planned to buy Tribune Media for $3.9B — a deal that will transform the local TV landscape. Leading up to the deal announcement, the Pai-led FCC undertook several moves aimed at loosening regulations preventing certain dealmaking by local station owners. Sinclair, already the No. 1 owner of stations in terms of volume, would become a colossus potentially reaching more than 70% of U.S. households.
The inspector general is looking into communications between Pai and Sinclair regarding the activities of the FCC, which would have given the company uncommon visibility into the regulatory climate its Tribune deal would face. Last summer, the Times had reported on several meetings and written communications between the parties, which prompted Pallone and others to request a formal investigation. The two Democrats on the FCC have frequently and publicly cast suspicion on the sequence and speed of events surrounding the Sinclair-Tribune deal.
“For months I have been trying to get to the bottom of the allegations about Chairman Pai’s relationship with Sinclair Broadcasting,” Pallone told the Times in a statement. “I am grateful to the F.C.C.’s inspector general that he has decided to take up this important investigation.”
Reached by Deadline, Sinclair declined to comment. An FCC spokesperson offered this statement to Deadline: “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.”
One key element in play is the political climate in the media regulation space since Donald Trump was elected in November 2016. Pai, who is now in his second term on the five-member FCC, initially served on the Republican minority during Tom Wheeler’s run as FCC chairman under President Obama. Now, as Trump has sought to deregulate many industries, Pai controls the majority and has acted swiftly to undo decades’ worth of regulations. Sinclair, meanwhile, has often flashed conservative credentials, for example hiring former Trump Administration official Boris Epshtyn and having him deliver commentary segments that its local stations must run.
It is hard to know where the Pai probe will end up, but those responsible for watching over federal agencies sometimes play an important role in keeping things on track. The inspector general for the Dept. of Veterans Affairs earlier this week delivered a blistering report about the department’s head, David J. Shulkin, who spent thousands of taxpayer dollars and several days when he was supposed to be working taking tours of the UK and Europe.
The topic and the state of the Tribune deal are likely to come up on February 28, when Sinclair is scheduled to report its next quarterly financial results.