Petitions to Deny Slam Sinclair Divestitures, Urge FCC to Wait for DC Circuit UHF Discount Ruling
The FCC should reject Sinclair/Tribune’s divestiture plans as a sham, wait for the U.S. Court of Appeals for the D.C. Circuit to rule on the UHF discount and block the transaction, said petitions to deny in FCC docket 17-179 by a host of anti-media-consolidation groups, MVPD entities, state attorneys general, Newsmax, the Parents Television Council and American Civil Liberties Union. “This proposed merger, which would create the largest television broadcasting company in history, is anticompetitive to its core,” said the ACLU. NCTA and three state attorneys general had concerns.
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It “makes no sense” for the FCC to decide on Sinclair buying Tribune “when the rules of the road on broadcast ownership may be fundamentally altered in the coming months,” said Cinemoi, Herndon-Reston Indivisible, Sports Fans Coalition, NTCA, Public Knowledge and others. Approving the deal before the D.C. Circuit decision would be “premature,” Dish Network said. If the deal is approved and the discount is knocked down, “it will be difficult to un-do the transaction to comply with the law,” said the Communications Workers of America, National Association of Broadcast Employees and Technicians-CWA and NewsGuild-CWA: “Due process is important.” If the FCC moves to alter the cap, it must not grandfather the UHF discount to pending transactions, said Cinemoi and the other groups. Commissioners may consider the cap in August (see 1806200058). Sinclair didn't comment, but had said the deal would allow it compete with other media companies and invest more in local news.
Nearly all the petitioners hammered Sinclair divestiture plans. Almost every filing attacked the validity of the sales to Sinclair sidecars Cunningham, Howard Stirk Holdings (HSH) and the newly created WGN-TV. “Sinclair is proposing to transfer the relevant stations from its metaphorical right hand to its left hand, and calling this farce diverse ownership,” said Free Press, noting Cunningham and HSH are subsidiaries of Sinclair according to the SEC. “This strategy is so old that Free Press finds itself disappointed not only by Sinclair’s utter lack of concern for its public interest obligations, but also by its shamelessness.”
The sales to Cunningham, HSH and WGN are at “fire sale prices” and contain a 48-year option clause, Newsmax said. “No arms-length transaction would provide the seller an option to buy back the sold assets, at a substantially similar price, for nearly half a century,” Newsmax said. “There is good reason to think that the divestiture transactions will themselves cause harm,” said the American Cable Association. Sinclair’s divestiture to Fox will cause Fox to increase its reach and cause the retransmission consent rates for Fox stations to rise in turn, ACA said.
Some aimed at top-four showings. Where Sinclair is seeking a top-four duopoly in St. Louis, it hasn’t specified which station will be divested, said the attorneys general of Illinois, Iowa and Rhode Island. That lack of specificity precludes the FCC from deciding whether the deal complies with FCC rules, AG's said. “This transaction will result in significant consolidation in the St. Louis market and will not advance competition or diversity.” Sinclair failed to show its top-four proposals in St. Louis and Indianapolis are in the public interest, NCTA said. “Granting Sinclair’s request based on such a flimsy showing would make the Commission’s Top-Four Prohibition and the public interest standard effectively meaningless,” NCTA said.
Sinclair's having de facto control of its sidecar operations will have consequences for retrans and consumers, said ACA, NCTA and the American Television Alliance. Sinclair’s filings “failed to even address the issue of retransmission consent fees, notwithstanding the Commission’s explicit suggestion that they do so,” ATVA said. The FCC has penalized Sinclair for violating joint negotiation rules, ATVA said. The FCC should act to prevent the divestiture process from activating after-acquired clauses in the retrans deals of stations divested by Sinclair, ACA said.
Many focused on localism. “When Sinclair buys a station, cutting local news operations is not far behind,” said CWA. The “inevitable result” of local stations being owned by “corporate behemoths that are based hundreds, or even thousands, of miles away” is that community standards are "obliterated,” said PTC. The FCC has “reprimanded” Sinclair for failing to identify paid content, said the National Hispanic Media Coalition, Common Cause and United Church of Christ. Sinclair will have “unprecedented access to millions of households who will be forced to rely on Sinclair for information,” the groups said.
The deal will disproportionately affect minorities since they tend to be bigger consumers of broadcast TV, said the ACLU. “Sinclair has not shied away from airing content that is disparaging towards minority groups,” the ACLU said, citing“Terrorism Alert Desk” segments. “Sinclair's must-run stories have regularly included racist content,” the ACLU said.