Sinclair to Pay $9.5M Following Pay-TV Negotiation Probe

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By Kyle Daly and Lydia Beyoud

July 29 — Sinclair Broadcast Group Inc. will pay about $9.5 million under the terms of a settlement reached between the company and the Federal Communications Commission, the agency announced July 29.

The settlement resolves an investigation into whether Sinclair violated the standards for good-faith negotiations by negotiating broadcast retransmission deals with pay-TV providers on behalf of 36 TV stations with which it held sharing agreements.

Once Sinclair makes the settlement payment, the FCC said it will grant license renewals to 90 Sinclair-owned stations. A number of the license renewals had faced challenges based on a range of claims including alleged violation of ownership limits and one claim of distorting the news presented on a particular station. In some cases, objections to the license renewals went back years, with the earliest dating from 2004.

Rebecca Hanson, Sinclair's senior vice president of strategy and policy, said in a statement the company “look[s] forward to starting this next chapter with a clean slate in the Media Bureau,” the FCC division that had been investigating the claims against Sinclair.

Industry Takeaways

Because the investigation ended in a no-fault settlement and involved a wide variety of actions allegedly undertaken by Sinclair stations around the country, it may be hard for broadcasters to read much into the settlement, Howard Liberman, a telecommunications attorney at Wilkinson Barker Knauer LLP in Washington, told Bloomberg BNA.

“The problem in general with consent decrees is, normally, if somebody is fined for something, the FCC would say, 'Here's what you did,' and you're fined for it, and there's a deterrent effect,” he said. “You can't tell here what they did that cost them $10 million. They didn't admit any liability. Although the allegations are set forth, you can't tell which of those allegations stuck to the wall.”

Another D.C. broadcast attorney speaking on background told Bloomberg BNA the Media Bureau does sometimes use consent decrees to send messages to the industry about where it stands on an issue.

The bureau may use the decrees to warn broadcasters to think twice about operating under an interpretation of the commission's rules that may run contrary to what was issued in a consent decree, the attorney said.

A Tangled Web for Retrans, Sharing Agreements

Broadcasters, pay-TV providers and the FCC have wrestled with sharing agreements such as those cited in the settlement.

The FCC in 2014 voted to limit sharing agreements and joint retransmission negotiations between broadcasters. Congress reinforced the joint negotiation ban in the STELA Reauthorization Act of 2014 (2015 TLN 20, 1/1/15) but later used its fiscal 2016 omnibus spending bill to grandfather in as permissible all joint sales agreements that were in existence before the FCC acted to limit them (2016 TLN 8, 1/1/16).

In May, the U.S. Court of Appeals for the Third Circuit vacated the rule in part because the FCC hadn't completed an overdue review of media ownership rules (2016 TLN 5, 6/1/16) Howard Stirk Holdings LLC v. FCC, et al (3d Cir. 2016) (decision).

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com; Lydia Beyoud in Washington at lbeyoud@bna.com

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

For More Information

The consent decree detailing the terms of the settlement is available at: http://src.bna.com/hf4.

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