FCC Releases More Info On $48 Million Fine To Sinclair Broadcast Group; Democrats Blast It As An Insufficient Settlement

Sinclair headquarters in Hunt Valley, MD. Steve Ruark/AP/Shutterstock

The two Democrats on the FCC are blasting the agency’s decision to settle investigations into Sinclair Broadcast Group with a record $48 million fine.

Earlier this month, Sinclair agreed to pay a $48 million civil penalty — the largest imposed on a broadcaster in the FCC’s history — to close three open government investigations, including of its conduct as it sought to acquire Tribune Media in 2018.

FCC Commissioner Jessica Rosenworcel said that the settlement “ignores its rules and bends the facts in order to assist Sinclair Broadcast Group with sweeping its past digressions under the rug.” She was joined in her vote against the settlement with the other Democrat on the five-member commission, Geoffrey Starks.

Some critics of the broadcaster should be imposed given its alleged conduct during the Tribune transaction.

At the time the fine was announced this month, FCC Chairman Ajit Pai said that its “conduct during its attempt to merge with Tribune was completely unacceptable” and said that the penalty “should serve as a cautionary tale to other licensees seeking Commission approval of a transaction in the future.” But he said that he disagreed that “those who, for transparently political reasons, demand that we revoke Sinclair’s licenses.”

Sinclair owns, operates or has service agreements with 191 television stations in 89 markets. Its proposed merger with Tribune Media, announced in 2017, would have made it even larger, with more than 200 stations across the country and a major expansion into the top 10 markets. But the merger was quickly met with opposition, as critics focused on the company’s tactics in its effort to win regulatory approval for the transaction.

In July, 2018, the FCC announced that it was not approving the merger but instead sending it to an administrative law judge, concluding that there were “material questions” of whether Sinclair misrepresented itself or engaged in a “lack of candor” over its plan to divest stations and comply with media ownership limits.

More specifically, the FCC also zeroed in on potential “sham” transactions in which Sinclair would sell stations, including WGN-TV in Chicago, to entities in which Sinclair chairman David Smith and members of his family still held an interest. In the case of WGN, the station was to be sold to Steven Fader, who has a business relationship with Smith. The FCC also raised questions about the proposed WGN purchase price of $60 million  and whether it was below market value, and pointed to other proposed sales of stations to Cunningham Broadcasting.

The next month, in August, 2018, Sinclair and Tribune dropped their merger plan, and litigation between the two companies followed. Nexstar ended up acquiring Tribune.

In the order released on Friday, the FCC said that Sinclair provided additional information about the transactions, including on the nature of its relationships with the buyers of WGN-TV and other stations and on how the sales price was determined.

“Following review of this subsequent information, we find that Sinclair structured its transaction based upon a good faith interpretation of the Commission’s rules and precedent regarding sharing agreements and the requirements for disclosure on the application form,” the FCC said.  Sinclair did not admit a violation as part of the settlement fine, but it agreed to enter into a consent decree.

Rosenworcel, in a statement, said that questions were still unresolved about the way that Sinclair pursued the merger. She said that “consent orders ‘may not be negotiated with respect to matters which involve a party’s basic statutory qualifications to hold a license.’ Yet here the agency addresses material misrepresentations behind closed doors and then summarily dismisses them in a consent decree. Doing so is a clear end run around this rule.”

IIn his statement, Starks said that “what is clear is that by foregoing a real investigation, we run the risk of sending a message to future applicants that they can get away with almost anything if they can write a big enough check, even without admitting to any wrongdoing.”

In addition to the investigation of Sinclair’s conduct during the merger proceedings, the consent decree with the FCC also closed other probes. That included one into whether Sinclair met its obligations to negotiate retransmission consent agreements in good faith, and another over its failure to make required disclosure of the true sponsor of content that was made to look like news reports or longer form 30-minute presentations. In fact, the true sponsor of the content was the Huntsman Cancer Foundation. The FCC already had voted to propose a fine of more than $13 million for the practice, as the programming in question was broadcast more than 1,700 times.

The two other Republican members of the FCC said that they considered the matter closed. Commissioner Brendan Carr said in a statement that “there are some political actors, including in Congress, that have long and repeatedly called for the FCC to go after Sinclair based on those politicians’ disagreement with the viewpoints expressed in Sinclair’s broadcasts. We don’t do that at the FCC—or at least a majority of us do not do that.”

Commissioner Michael O’Rielly said that the Sinclair fine was “far from the slap on the wrist that critics bemoan,” and defended the agency’s action. He said that the “text is precise that Sinclair acted in good faith in its interpretation of Commission rules and precedent and that there is no character qualification issue arising from the underlying applications.”

This article was printed from https://deadline.com/2020/05/fcc-sinclair-broadcast-group-ajit-pai-jessica-rosenworcel-1202941828/