A “shocked and disappointed” Sinclair Broadcast Group on Monday evening strongly denied that it had deceived the FCC with its proposal to spin off stations to comply with the agency’s ownership limits and win approval of its long-pending $3.9 billion merger with Tribune Media.
“[A]t 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,” Sinclair said.
“Any suggestion to the contrary is unfounded and without factual basis.
“We are prepared to resolve any perceived issues and look forward to finalizing our acquisition of Tribune Media.”
The first shock to Sinclair came Monday morning when FCC Chairman Ajit Pai released a statement that he had evidence that Sinclair would “in practice, if not in name, control” stations that it had said it would divest to comply with the rules.
And in light of that evidence, Pai said he had circulated an item to the other three commissioners asking for their vote to hold an administrative hearing on Sinclair and the merger.
“When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction,” the chairman said.
That sent shares of Sinclair and Tribune tumbling as analysts and investors for the first time were faced with the prospect that the merger may never close.
A full-blown hearing before an administrative law judge could easily take a year or more.
The second shock came Monday afternoon when Reuters reported that it had seen a draft of the hearing order that suggested that the Sinclair merger proposal may “involve deception.”
Misrepresentation or lack of candor are capital crimes at the FCC — that is, they are violations that could lead to a broadcaster’s inability to hold any broadcast licenses.
So, suddenly, Sinclair has more than the Tribune merger to worry about.
“Throughout the FCC review process of this transaction, we have had numerous meetings and discussions with the FCC’s Media Bureau to make sure that they were fully aware of the transaction’s structure and basis for complying with FCC rules and meeting public interest obligations,” Sinclair said.
“These structures are consistent with structures that Sinclair and many other broadcasters have utilized for many years with the full approval of the FCC.
“During these discussions and in our filings with the FCC, we have been completely transparent about every aspect of the proposed transaction.
“We have fully identified who the buyers are and the terms under which stations would be sold to such buyer, including any ongoing relationship we would have with any such stations after the sales. We have filed all relevant agreements documenting such terms as required by FCC rules.”
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Comments (21)
JohnnyHD says:
July 16, 2018 at 10:45 pm
Wow, this is typically messed up government in action. You fully disclose what you plan on doing and it’s within current FCC rules but now it may involve deception.
hopeyoumakeit says:
July 17, 2018 at 9:48 am
Really ? No one else is ..
James V. says:
July 17, 2018 at 10:05 am
There is a difference between full transparency of a deal’s written terms, and how things actually work once a deal is implemented. While I have no personal knowledge of Sinclair’s actual operations for all the various “side-car,” joint services, joint marketing and other arrangements it has around the country, from other experience I find it hard to believe that all those transactions are as “cleanly” implemented as the words in the transaction documents suggest. That’s one of the big problems of paper hearings and adjudications – they allow the parties and their very experienced and knowledgeable attorneys to craft documents that say all the “right” things and have the right provisions, crafted to meet FCC requirements, but they don’t necessarily represent what really happens once a deal closes. Allowing cross-examination of relevant witnesses, as occurs in a hearing, provides an opportunity to look behind the words on the paper to see what actually has happened (perhaps including at other stations with similar deals) and is likely to happen if the new deal is allowed to proceed. FCC case law is full of applicant proposals that, when you look behind the curtain, are not at all what they seem on paper.
Doug says:
July 17, 2018 at 10:20 am
These deals have been smelly for a long time. It is not just Sinclair but Nexstar and many others that have grown over the last decade in ownership. How many jobs in the industry have been lost to these phony management/ ownership deals?. This is the way all of these deals are structured with the main company on top keeping control of side car deals. One GM, one News Director, One DOS and lots of managers and support people cast to the curb. It also locks up stations in larger markets and diminishes the value of smaller market stations. Prior to these rules if a company wanted to expand, they had to look at more markets which enhanced the value of all markets. Now you have 3-4 stations in middle to large markets all controlled by one entity. I am not sure what Sinclair did to upset the apple cart this time but these deals have been going on for a long time to the detriment of the industry. Maybe the FCC will go back an review some of their other deals that have been approved.
TVMN says:
July 17, 2018 at 10:09 am
If anyone knows about deception, it’s Sinclair. It’s their motto: “Deceiving American Audiences since 1971”
Impressed says:
July 17, 2018 at 10:20 am
Sinclair learned nothing from the debacle of RKO-General, I see. I’m surprised Pai is holding fast to the rules on this. I would have expected him to be lenient to his fellow conservative broadcasters.
Sinclair has a large portfolio of stations. That’s a lot to lose if they are found guilty of deception.
Johnathan Williams says:
July 17, 2018 at 12:43 pm
Sinclair..The Smith ‘s deception???? No…………..
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