As Sinclair Merger Teeters on the Brink, FCC and DOJ Should Wait for Judges to Rule

Judges Question Key FCC Rule Change That Made Way for Potential Sinclair/Tribune Merger – FCC Chair Still Being Investigated by Inspector General Over Sinclair Ties


WASHINGTON, D.C. – Today, consumer watchdog organization Allied Progress called on the Federal Communications Commission and Department of Justice’s Antitrust Division to delay any final decision on Sinclair Broadcast Group’s proposed merger with Tribune media until a three-judge panel at the U.S. Court of Appeals for the D.C. Circuit issues its ruling in a case challenging a recent FCC rule change, which made it possible for major media companies that own many local television news stations to own even more. Without the rule change, Sinclair’s gambit wouldn’t be possible.

Bloomberg reported this afternoon that the poor showing by the FCC’s lawyers defending the pro-merger rules change in the case is likely to set up “a race for Sinclair to close before the decision comes out.” In February, the FCC’s inspector general opened an investigation into FCC chairman Ajit Pai to determine whether he was biased in his repeated support for rules changes that appeared to clear the way for the Sinclair/Tribune deal.

The FCC and DOJ should do the right thing and let the court issue its ruling before making a decision on the proposed Sinclair/Tribune merger. If the court comes down against the FCC’s rules change that cleared the way for this deal, it would likely disqualify Sinclair from such an enormous ownership stake in the local television marketplace,” said Karl Frisch, executive director of Allied Progress.

He continued, “The lengths to which Chairman Pai has gone in order to help Sinclair monopolize the local television news industry is astonishing. He has swept aside longstanding FCC policy and advanced a number of rules changes tailor-made for Sinclair’s benefit. If there is an ounce of ethical leadership left in Mr. Pai, he will not allow the FCC to act on this merger until after the court has ruled.”

 WHAT YOU NEED TO KNOW:

  • Today, judges on the DC Circuit Court of Appeals “questioned why [the FCC] had reinstated a rule allowing owners of some TV stations to count just part of their audience when tallying holdings against a national limit of 39 percent.” On April 20, 2018, “Judges at the U.S. Court of Appeals for the D.C. Circuit questioned why the Federal Communications Commission had reinstated a rule allowing owners of some TV stations to count just part of their audience when tallying holdings against a national limit of 39 percent.” [Todd Shields, “Sinclair Drops as Judges Question Rule Leading to Tribune Deal,” Bloomberg, 04/20/18]
  • One of the judges even compared the FCC’s reinstatement of the discount rule “to keeping a moribund body on life support.” “One judge on the three-judge panel likened the FCC’s continuing the audience-counting discount, which is based on limitations from an obsolete broadcast technology, to keeping a moribund body on life support.” [Todd Shields, “Sinclair Drops as Judges Question Rule Leading to Tribune Deal,” Bloomberg, 04/20/18]
  • At least one analyst noted that “if the FCC loses” their case before the DC Circuit, “the court could order the agency to reconsider an approval of Sinclair’s deal.” At least one analyst thinks if the FCC loses their case before the DC Circuit, “the court could order the agency to reconsider an approval of Sinclair’s deal.” [Todd Shields, “Sinclair Drops as Judges Question Rule Leading to Tribune Deal,” Bloomberg, 04/20/18]

MORE BACKGROUND:

  • Since becoming FCC Chairman in January 2017, Ajit “Pai has undertaken a deregulatory blitz, enacting or proposing a wish list of fundamental policy changes advocated by” David Smith and Sinclair Broadcast Group. Most significantly, Pai, in led the FCC in reinstating the UHF discount, “a decades-old regulatory loophole that will keep Sinclair from vastly exceeding federal limits on media ownership.” [Cecilia Kang, Eric Lipton, and Sydney Ember, “A Conservative TV Giant, Unleashed,” The New York Time, 08/14/17; “Sinclair’s Local TV Takeover,” WPSU, 08/16/17, (14:30); Margaret Harding McGill and John Hendel, “How Trump’s FCC aided Sinclair’s expansion,” Politico, 08/06/17]
  • In April 2017, Ajit Pai “revived a decades-old regulatory loophole that will keep Sinclair from vastly exceeding federal limits on media ownership.” The FCC “voted to ease a limit on TV-station ownership” and reinstate the UHF discount, which opened “a door to mergers such as Sinclair Broadcast Group Inc.’s bid for Tribune Media Co.” The vote “restored the practice of counting just part of some stations’ audience” allowing “more room to buy stations before a company reaches the limit of serving 39 percent of the national TV viewership.” Sinclair already reaches 38% “of U.S. households without the discount, leaving it almost no room for growth,” while Tribune “is already over the cap by reaching 44% of homes.” [Margaret Harding McGill and John Hendel, “How Trump’s FCC aided Sinclair’s expansion,” Politico, 08/06/17; Todd Shields, “FCC Regulators Vote to Ease a Limit on TV Station Ownership,” Bloomberg, 04/20/17; Alayna Treene, “Sinclair-Tribune merger discussion could test Trump,” Axios, 05/01/17]
  • In September 2017 a coalition of non-profit groups filed a motion in federal court to stop the reinstatement of the UHF Discount. [John Eggerton, “UHF Discount Foes Fire First Legal Shot,” Broadcasting & Cable, 09/26/17]

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