FCC Asks Sinclair for More Data on Tribune Deal

Keep up with the latest developments and legal issues in the telecommunications and emerging technology sectors, with exclusive access to a comprehensive collection of telecommunications law news,...

By Tara Jeffries

The Federal Communications Commission has asked Sinclair Broadcast Group Inc. to explain how it will comply with a national rule limiting the reach of broadcast stations in its proposed purchase of Tribune Media Co.

The FCC simultaneously is reviewing the proposed deal and reworking media regulations, taking aim at those Chairman Ajit Pai sees as outdated. The FCC’s request suggests that it wants to see which stations Sinclair would agree to divest in the deal, Bloomberg Intelligence analyst Josh Yatskowitz told Bloomberg BNA. It’s possible Sinclair would only have to divest stations in New York and comply with the limit, Yatskowitz said.

“It’s hard to believe that the FCC will outright block this,” Yatskowitz said. “But I think they just want to stay within the rules as they are now.”

In a Sept. 14 letter, the commission’s Media Bureau said it wants Sinclair to specify the scope of its national reach. The agency also requested details on how Sinclair would comply with a 39 percent national audience cap on broadcast station ownership. According to the FCC, Sinclair has told the commission that, if it acquires Tribune, it would exceed the ownership limit by about 6.5 percent—before shedding any of its stations. But Sinclair hasn’t specified the extent of its current reach, the FCC said in its letter.

“The Applicants do not indicate what steps, if any, they have already taken or what specific steps they plan to take Post-Transaction to comply with the national ownership limit,” the FCC wrote. The commission asked Sinclair to respond by Oct. 5. A spokeswoman for Sinclair did not immediately respond to a request for comment.

Pai declined Sept. 15 to elaborate on the letter or comment on what potential divestitures the commission may ask Sinclair to make as a possible condition of approving the deal.

The proposed merger has drawn fire from conservative media outlets, small cable operators, and public-interest groups who have argued that Sinclair would muscle out smaller broadcast companies and increase consumer costs by raising the price of transmitting its central content.

Groups including Public Knowledge and Common Cause argued in an August FCC petition that a bigger Sinclair could cause delays in the reshuffling of spectrum among broadcasters and mobile broadband providers as the broadcasters move toward next-generation technology.

The agency in April reinstated a discount that halved the audience count for certain broadcast stations in the formula for calculating whether one company exceeds the 39-percent cap. That move paved the way for Sinclair to make its Tribune bid.

[With assistance from Kyle Daly]

To contact the reporter on this story: Tara Jeffries at tjeffries@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Tech & Telecom on Bloomberg Law