Sinclair’s behavior in trying to merge with Tribune is doing it — and the entire broadcasting industry — no favors. By dragging out this process, and by pressing for every advantage, Sinclair is making life difficult for FCC Chairman Ajit Pai, who has been broadcasters’ best friend in that job in decades.
Sinclair Creating Bad Optics For Pai
Last fall, I wrote that Sinclair has to quit screwing around with its Tribune merger application.
It ignored me.
So, here I am again, with the same advice, this time for the sake of FCC Chairman Ajit Pai and for other broadcasters.
Sinclair’s basic problem is that it cannot let go. It considers broadcast spectrum so valuable that it has been trying every argument and legal maneuver it can think of to hang on to every megahertz.
This effort has taken it through an extensive, but mostly fruitless, effort at the Justice Department to convince the antitrust enforcers there that it is OK to own two top-4 stations in most of the markets where it will have such overlaps.
It has led it to file a sketchy application and complicated amendments filled with requests for divestiture trusts, waivers and spinoffs that are, in some cases, hardly spinoffs at all.
So, why should average broadcasters care?
Broadcasters have had no greater friend than Pai in the chairmanship since the Reagan administration (Mark Fowler and Dennis Patrick).
By dragging out this process, and by pressing for every advantage, Sinclair is making life difficult for Pai.
Pai is already a villain in the eyes of many for dismantling the net neutrality regime that Tom Wheeler left behind. It was a heavy handed regulatory solution to a problem that doesn’t yet exist — discriminatory access to the internet by the ISPs. It needed to go.
But left-wing zealots, egged on by the ISPs and some Big Tech companies, whipped the opposition into such a frenzy that Pai received death threats.
But more to our point today, he has been accused of being in the pocket of Sinclair Executive Chairman David Smith.
These accusations began after he led the FCC in eliminating the UHF discount, giving Smith the headroom he needed under the national ownership cap to acquire Tribune.
Democratic Commissioner Jessica Rosenworcel who has emerged as Pai’s chief accuser, added the charge that the FCC’s authorization of ATSC 3.0 was another Sinclair give-away. Sinclair will make billions from its 3.0 royalties, she alleges.
All the hooting and hollering by Democrats have apparently prompted the FCC inspector general to looked into Pai’s dealings with Sinclair.
What he will find, I believe, is that Smith met with Pai and made his case for regulatory relief and 3.0. That sounds like business as usual to me. In fact, if the head of any FCC-regulated business has not been in to see Pai with a wish list at this point, he or she ought to be fired.
Nonetheless, the accusations have had an effect and have put Pai in a delicate position. And Sinclair seems to be intent on making it even more so.
To get below the national ownership cap, Sinclair has proposed spinning off the Tribune stations in New York and Chicago — WPIX and WGN.
It had three ways to go here:
- Just sell the stations to another broadcast group.
- Create a sidecar company using a person — perhaps a woman or minority — with some independence and some ideas for a little public affairs programming.
- Create a sidecar using a person who, it would be obvious to all, was simply a mindless placeholder for Smith.
I thought for sure it would go with No. 2. It already had Armstrong Williams set up as its sidecar in several other markets. And it could have easily found others with a small streak of independence.
Of course, oblivious to the optics, Sinclair chose No. 3. WGN went to Smith’s auto dealer partner in Baltimore, and WPIX went to Cunningham Broadcasting, essentially a front for Sinclair that owns many of its sidecars. You would have thought that Sinclair would have at least come up with a Chicagoan and a New Yorker.
That Sinclair was even able to propose the sidecars was a result of another favor Pai did the industry last year when it reaffirmed the use of joint sales agreements, which are at the heart of the sidecar deals.
Sinclair’s New York and Chicago spinoffs, although within the bounds of precedent and wholly legal, look bad. They look like an abuse of process. And looks matter, especially in Washington.
But, as it has shown throughout the approval process, Sinclair doesn’t care how much damage it does to Pai’s image as long as it gets what it’s after.
But other broadcasters should. They will be calling on Pai for help with matters known (national ownership cap, kidvid, repack) and unknown over the next few years of his chairmanship.
Everything Pai has said and done since joining the FCC as a commissioner in 2012 says he is inclined to help. As much as he likes broadcasting, he doesn’t like regulation.
But how much he can help will depend on how strong he is politically, how much his decisions appear driven by sound policy rather than cronyism.
The Sinclair-Tribune process has undermined those appearances from the beginning.
Fortunately, the approval process seems finally to be grinding to an end. I heard that Sinclair this week received final bids for the top-4 stations it is selling in several markets to comply with the local ownership rules.
So, unless it comes up with some new scheme for circumventing the rules, Sinclair will announce the divestures in the next week or so and finally give the FCC a chance to weigh the whole package and put the whole mess behind it.