FCC chair rejects Sinclair-Tribune merger

17 July, 2018, 17:49 | Author: Cecil Buchanan
  • FCC chair rejects Sinclair-Tribune merger

As the FCC starts to really review the Sinclair-Tribune deal with a fine-toothed comb, the realities are setting in that this mega-merger may not happen, in total contrast to the conventional wisdom over a year ago.

He wants the merger to be sent to an administrative law judge for review.

"While we understand that certain parties which oppose the transaction object to certain of the buyers based on such buyers' relationships with Sinclair, a situation we are prepared to address if the FCC agrees with such views, at no time have we misled the FCC in any manner whatsoever with respect to the relationships or the structure of those relationships proposed as part of the Tribune acquisition", the company said. "Certain station divestitures that have been proposed to the FCC would allow Sinclair to control these stations in practice, even if not in name, in violation of the law".

The FCC did not elaborate on what disputes were in question, but the law is clear that it can not approve the transaction until the conflicts are settled.

The order also questions ties between Sinclair and the proposed purchaser of the Texas station, the official said. "Any claim that Chairman Pai is modifying the rules now to benefit one particular company is completely baseless".

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Earlier this year, 15 members of the Coalition to Save Local Media, including Common Cause, sent a letter to the FCC raising alarm about "sidecar arrangements" that Sinclair planned to use to make the merger appear to comply with federal audience-cap rules, even though the company would continue providing all services to the "sold" stations.

"Sinclair has a long track record of taking over respected stations, gutting local news coverage that communities rely on, and poisoning broadcasts with a partisan political agenda experts have called propaganda", Karl Frisch, executive director of Allied Progress, said in a statement. If approved, Sinclair would control more than 200 stations across the country, reaching about 59 percent of the US audience, according to its own estimates. "I think the last filing didn't satisfy anybody that Sinclair wasn't going to still have some control over these stations". The FCC has been waiting for an updated deal from Sinclair and the question now is whether this new deal will be enough to appease the DOJ and the FCC. An online video that went viral showed dozens of TV hosts reading that script in unison. He has praised the company on Twitter, saying it's superior to AT&T's CNN and Comcast's NBC. Shares were down 14 percent to $33 at 1:56 p.m.in NY trading and dropped as low as $31.61.

Opponents of the Sinclair-Tribune merger argued that it would give too much power to a single media giant, allowing it to push out smaller outlets and gain an anticompetitive edge when negotiating with cable companies.

Chris Ruddy, CEO of the conservative television network Newsmax and an opponent of the merger, applauded Pai's decision in a statement. "With this hearing designation order, the agency will finally take a hard look at its proposed merger with Tribune". Democratic commissioner Jessica Rosenworcel also said in a statement she intends to support the recommendation. "This is overdue and favoritism like this needs to end".

Both Tribune and Sinclair stocks dove following Pai's announcement, with Tribune down 17% to $32.11 while Sinclair was down 12% to $29.10.

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