FCC Plans Probe Into Sinclair Conduct Before Merger With Tribune Went Awry

Sinclair Broadcasting

In the year since the Federal Communications Commission effectively torpedoed Sinclair Broadcast Group’s planned $3.9 billion merger with Tribune Media, the possibility has existed that an investigation could result.

This week, the FCC confirmed it is formally looking into whether Sinclair had intentionally misled regulators when it detailed plans to divest stations, a common step under federal ownership rules. Tribune has 42 stations, many of them in top media markets, and Sinclair has 192.

The Sinclair-Tribune deal was applauded by President Donald Trump, whose election in 2016 followed extensive appearances on Sinclair stations during the campaign. The station group has also aired pro-Trump commentary segments and made national news in early 2018 when a video compilation of Sinclair station anchors repeating a obligatory scripted warning about “false news” went viral.

The so-called “sidecar” deals arranged by Sinclair in order to effect the divestitures involved entities without broadcast TV experience and with business ties to Sinclair. In at least one case, the valuation given for the station was far below the going market rate, raising questions about the process.

Ajit Pai Jacquelyn Martin/AP Photo

FCC Chairman Ajit Pai, a Republican appointed by Trump, has made a lot of deregulatory, pro-business moves while chairing the regulatory body that have been seen as pro-Trump. His FCC appeared likely to sign off on SInclair-Tribune, over the howls of Democrats and activists who feared its scale. Toward the end of the review, though, questions surfaced that prompted Pai to reconsider.

“Based on a thorough review of the record, I have serious concerns about the Sinclair-Tribune transaction,” Pai said last summer. “The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

In a statement to multiple media outlets this week, the FCC said that its media bureau “is in the process of resolving an outstanding issue regarding Sinclair’s conduct as part of the last year’s FCC’s review of its proposed merger with Tribune. The Bureau believes that delaying consideration of this matter would not be in anyone’s interest.”

Sinclair’s future dealmaking could be affected by the outcome of the probe. Chief among its transactions is a $10.6 billion one announced in May for Sinclair and partners to buy 21 regional sports networks and Fox College Sports from Disney. The purchase was required by the Department of Justice as a condition of DOJ approval of the Disney-Fox deal.

DOJ antitrust regulators must approve the RSN transaction. The agency took a look at Sinclair-Tribune but never made a decision on it because the FCC started to find so many flaws in the proposed merger, which was scrubbed by Tribune last August. Tribune subsequently made a $4.1 billion deal to be sold to Nexstar, which is poised to leapfrog Sinclair and become the No. 1 owner of local stations in the U.S.

On Twitter, FCC commissioner Jessica Rosenworcel wrote that the investigation is “warranted. But any settlement negotiated behind closed doors will leave us with more questions than answers about one of the nation’s largest broadcasters. The FCC should hold a hearing in public on these questions and do it now.”

A Sinclair rep did not respond to Deadline’s request for comment.

This article was printed from https://deadline.com/2019/06/fcc-plans-probe-into-sinclair-conduct-before-merger-with-tribune-went-awry-1202639107/