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.
JESSELL AT LARGE
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.
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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.
Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or here. You can read earlier columns here.
Comments (18)
Raoul Marinescu says:
March 9, 2018 at 3:36 pm
It also doesn’t help that Sinclair just can’t stop generating headlines about their corporate-driven propaganda efforts. They’re trying to close the biggest merger in TV history. Couldn’t they put Boris and Scott Livingston on ice for a few months until they get this done? Arrogant and stupid. The public comment period for this merger is going to be the stuff of legends.
Mike Long says:
March 9, 2018 at 3:38 pm
Sinclair are shrewd, smart business people making a move in a dormant industry that badly needs to be really deregulated. Who cares if the sidecar owner is not a woman or a minority, the liberals would never be pleased (optics), they don’t care because what really matters here is that Sinclair has a conservative editorial view and that is something the left and Democrats can’t stand!
Brian Bussey says:
March 9, 2018 at 3:58 pm
we progressives could care less what Sinclair’s editorial position is. We don’t like them becoming the Faux Broadcast Network where FACTS are not necessary in political reporting.
Julien Devereux says:
March 9, 2018 at 3:46 pm
Oh come on. Optics?
Pai has a nice, fat, emeritus job coming with Sinclair once he’s done at the FCC. He literally changed a rule to make it possible for Sinclair to swallow up Tribune, when it wasn’t before, and, changing the rule didn’t or couldn’t help any other company.
This is what cmack101 said because, they have to grab what they can as fast as they can because the Washington corporatocracy is coming apart much faster than they thought it would, and it may not be possible to get away with megamergers, ripping up national parks for strip mining, etc, for much longer.
Gene Johnson says:
March 9, 2018 at 3:56 pm
“Cunningham Broadcasting, essentially a front for Sinclair that owns many of its sidecars.” Harry, this quote of yours is a partial explanation why the Wheeler Commission acted as it did regarding JSA’s and Shared Services Agreements. While the language of such agreements may provide that the licensee retains control, as the FCC defines it (personnel, programming, finances), the real-world manner in which such agreements were/are implemented means that the “sidecar” licensee really is exercising little, if any control over “its” station. That Chairman Pai has chosen to ignore the realities of how many of these agreements work in practice does show where his bread is buttered (no, I don’t think he’s in Sinclair’s pocket, just that his regulatory approach is mostly in line with Sinclair’s objectives). In the “bad old days” of comparative hearings for new stations, parties had a chance to test the paper showing parties made to show why they should be the preferred applicant. Many of those applicants, and their paper showings, could not withstand scrutiny and were revealed as implausible (at best) or outright scams (at worst). The deregulatory approach the FCC has taken for a while now relies entirely on paper proceedings (with a few exceptions), and allows parties to say what they know the FCC wants to hear without the risk of having their assertions tested. Sinclair’s applications for the Tribune stations, as Harry has described them, indicate that Sinclair is playing just this kind of game.
Brian Bussey says:
March 9, 2018 at 4:01 pm
Monopolies do not exist in a vibrant, successful CAPITALIST economy.
I am getting sick of arrogant monopoly stories.
Brian Bussey says:
March 9, 2018 at 4:01 pm
Pai is a puppet.
Shenee Howard says:
March 9, 2018 at 4:12 pm
Please, what Sinclair has proposed for WPIX and WGN is a sham, it skirts the law and flies in the face of the intent. The only way this deal should be approved is Sinclair totally divests these stations and sells them to an owner/operator. Pai has even said that shared service aggeements benefit smaller markets and stations. It is bad enough an antiquated rule was reinstated to allow this merger. In the age of digital TV and high cable/satelite penetration, the UHF inferiority rule is long obsolete.
Joseph Koskovics says:
March 9, 2018 at 4:17 pm
Not to quibble, but they are using the absurd UHF discount to facilitate the acquisition of the Tribune stations. Using that discount keeps them under the cap. In the world of digital TV, anybody who knows anything knows that the UHF discount is a fraud. Broadcasting in the UHF band is an advantage, yet it only counts half as much as hamstrung VHF channels (which many stations were displaced to in the auction). Pai is allowing the discount to remain to satisfy his friends at Sinclair. No other reason!
Veronica Serrano Padilla says:
March 11, 2018 at 1:40 pm
But…but…but Pai supposedly is getting rid of antiquated and burdensome regulations (unless they help his buddies).
Dan Levitt says:
March 9, 2018 at 4:27 pm
Broadcaster’s Best Friend???? Somebody here needs a big piece of Humble Pai if they can avoid washing it down with the Kool-Aid. Pai has done nothing but prolong the inevitable of the future of Broadcast. Sidecar deals are a sham. $15 Million for WPIX? so the Smith trust can turn it around and sell it for hundreds of millions a few years down the line? Tribune’s dreamcatcher station in nowheresville USA just got $21 Million alone from Spectrum auction when those 3 Dreamcatcher stations just sold for $27 Million in total a few years ago. Smith Family is stealing away SINCLAIR Shareholder Value by creating WPIX sidecar – shareholders should be getting a few hundred million for WPIX and who’s interest is it in to sell WGN to a Car Dealer??? though, WGN and WPIX are pretty much run by used-car salesman as it is already.
Cheryl Thorne says:
March 9, 2018 at 5:08 pm
In the end it will not matter..Local TV is dying a faster than slow death…
Teri Green says:
March 9, 2018 at 5:27 pm
When this guy says “a problem that doesn’t exist,” what he forgets is YET. It most certainly WILL exist. And since when is giving everyone an equal chance something that is bad? Sorry Jessell wouldn’t last three seconds in a debate with a high school teenager, and it certainly destroys TVNewsCheck’s platform to give him a platform to give him a way to spout his nonsense.
Sure you want to give people a chance to speak their mind, but you should make sure they actually have a mind, otherwise you know where they’ll be spouting from.
Fred E Walker says:
March 10, 2018 at 11:43 am
Please correct me if I’m wrong but I believe TV Newscheck IS Jessell’s platform? I don’t agree with him all the time but if he takes the risk of creating the platform then it’s HIS platform to use when it comes to expressing HIS opinion, especially when he clearly is stating this is an op-ed piece. You can’t ask an entrepreneurial journalist to 1) Take a risk 2) and then just shut up. Right or wrong, indie voices that create their own platforms have every right to express their own opinions, so long as it’s clearly stated as such.
John Livingston says:
March 9, 2018 at 11:27 pm
Sinclair wanted their cake and eat it to why they dragged their feet for so long at least the DOJ is making Sinclair to sell the TV stations they needed to in order to get this merger with Tribune done. Sinclair did everything in their power not to sell at least the DOJ said no they should have listen to you Jessell.
Don Thompson says:
March 11, 2018 at 11:48 am
“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.”
This statement suggests that the American Cable Association — by participating in a lawful rulemaking process at the FCC to eliminate common carrier regulation of broadband ISPs — caused death threats against the current Chairman of the FCC. That is the cheap shot of all cheap shots. Has it really come to this? …. Please Follow Me On Twitter: @TedatACA or @AmericanCable
Veronica Serrano Padilla says:
March 11, 2018 at 1:37 pm
Depends if you “whipped the opposition into a frenzy” or not. Doubt contributing to a “lawful rule making process” would qualify for that.
Veronica Serrano Padilla says:
March 11, 2018 at 1:39 pm
By the way, queue up a totally off-topic and irrelevant comment by @Insider: