FCC IG Finds No Favoritism Toward Sinclair

“The suggestion that I favored any one company was absurd, and today’s report proves that Capitol Hill Democrats’ politically-motivated accusations were entirely baseless,” Pai announced. “I have called on the FCC for many years to update its outdated media ownership regulations to match the realities of the modern marketplace.” Rosenworcel didn’t comment.

Pai cited brief excerpts from the report. “Actions taken by Chairman Pai in the rulemakings identified in the letters from Congress are, as he stated in his interview, consistent with his long-held, and publicly espoused, policy beliefs,” says one. The report cited a December $13.5 million notice of apparent liability against Sinclair over sponsorship identification violations as evidence of “lack of favoritism.”

Pai’s designation of Sinclair/Tribune for hearing and rejection of Sinclair’s last-minute request for an alternative proposal make for “significant evidence that Chairman did not engage in any favoritism,” the IG reported. “We would recommend no further investigation.”

Sinclair and Tribune didn't comment.

Email, Phone Records

The report includes documents describing IG probes of phone and email records for Pai and his senior staffers, and descriptions of IG interviews of Pai and Chief of Staff Matthew Berry. They repeatedly denied inappropriate contact with Sinclair, and the IG said there’s no evidence showing otherwise. “If I had been influenced, things in Sinclair would have gone differently!” the report quotes Pai as responding. Pai and Berry also replied in the negative on whether they were influenced by Fox or other conservative media to act against Sinclair, the document said.

The report contains several details related to the failed Sinclair/Tribune. In Pai’s interview, he describes calling Sinclair General Counsel Barry Faber to give him the opportunity to withdraw the application ahead of the HDO. Berry described meeting with Sinclair in January, where “positions taken by Sinclair were indicative of the actions taken by the company that ultimately led to the FCC’s determination to designate the license transfer applications for hearing (HDO),” the IG said. Sinclair “was unwilling to do what was necessary for the merger to have a chance,” waited too long to file for divestitures and “wanted 100% of what it wanted, or nothing,” Berry told investigators. “The company would have had a better chance if it were more cooperative.” Berry described Sinclair representatives complaining the FCC favored big telecom companies over broadcasters, characterizing the positions as “a bit odd,” relayed the IG.

The IG touches on contacts between the White House and Pai, including Pai’s “job interview” for the chairmanship in January 2017 with PayPal founder Peter Thiel, presidential son-in-law Jared Kushner and then-President-elect Donald Trump. Trump didn't "ask any specific policy-related questions, nor did he question him about his regulatory philosophy, although he was interested in the legal framework of the AT&T/Time Werner merger,” the report said. It describes an email and phone call with Kushner in May 2017 that Pai said he didn’t recall. It briefly mentioned White House Counsel Don McGahn's July status check with Pai.

Critics React

“I always like to be the first one to admit I was wrong about something,” said Newsmax CEO Chris Ruddy, an opponent of Sinclair/Tribune who questioned Pai’s actions toward Sinclair in a Washington Post commentary. Pai and the FCC “demonstrated real independence and integrity relating to the Sinclair transaction,” Ruddy emailed us. “I am glad the Inspector General has brought this matter to a conclusion.”

Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman said it’s difficult to comment without seeing the report's text, but he trusts “that the chairman will be open and transparent in future matters involving licensees.” He said “this most especially includes communications with the executive branch, even as they are labeled status checks,” referring to McGahn's call with Pai.

House Commerce Committee ranking member Frank Pallone, D-N.J., and House Communications Subcommittee ranking member Mike Doyle, D-Pa., urged the FCC Monday to continue an administrative law judge’s investigation into claims Sinclair “made misrepresentations and lacked candor” in its now-junked application to buy Tribune. The ALJ “should not terminate the proceeding,” but if that comes to pass, the Enforcement Bureau should open an investigation into whether Sinclair “violated the Communications Act” and FCC rules, Pallone and Doyle wrote Pai. “Such a review should specifically examine whether Sinclair violated the law prohibiting licensees from making false material statements or omissions to the FCC,” given Pai’s serious concerns in the HDO that station divestitures could let Sinclair retain de facto control in violation of the law. “If accurate, such conduct may violate the Communications Act, and raises doubts as to whether Sinclair is sufficiently qualified to retain its FCC licenses,” Pallone and Doyle said. “It must be clear to Sinclair, and other licensees, that there are severe consequences for lying to the FCC.” The lawmakers sought an update by Sept. 13 on the proceeding's status.

The agency has received the letter and is reviewing it, a spokeswoman said. Sinclair didn’t comment on the lawmakers' request.