Sinclair’s License Woes May Outlive Aborted Tribune Bid

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By Jon Reid

The collapse of Sinclair Broadcast Group’s $3.9 billion bid for Tribune Media Co. may not be the end of its troubles at the Federal Communications Commission over broadcast licenses.

An administrative law judge’s review of the now defunct deal at the commission is likely to end, now that Tribune has walked away, media attorneys and academics told Bloomberg Law.

The FCC had referred the deal to an administrative judge to determine whether Sinclair “engaged in misrepresentation and/or lack of candor” with the agency about its plans to divest some television stations to win approval of the deal.

But Sinclair’s conduct may cloud its efforts to acquire other television stations or get its existing broadcast licenses renewed. Public interest groups are likely to remind the FCC about its concerns the next time Sinclair asks the agency to renew broadcast licenses or approve any purchase of new ones.

“The unresolved ‘lack of candor’ issues certainly could be raised in either a different license transfer to Sinclair or when their licenses come up for renewal,” Angela Campbell, director of Georgetown University’s Institute for Public Representation Communications and Technology Clinic, told Bloomberg Law in an email message.

The commission voted unanimously last month to refer the deal for administrative review, noting concerns that Sinclair would maintain de facto control over divested stations.

According to the commission, the media giant planned to sell WGN-TV, Tribune’s flagship Chicago, Ill., station, to an automobile executive with close business ties to David Smith, Sinclair’s former CEO and controlling shareholder. The FCC also questioned the sale of two Texas stations to a company that was until recently owned by the estate of Smith’s mother.

Tribune alluded to Sinclair’s divestiture proposals and the FCC’s move to an administrative review in an Aug. 9 lawsuit it filed against Sinclair, seeking damages and alleging a breach of contract.

Sinclair, which Aug. 9 asked the commission to end the administrative review, has denied wrongdoing.

“We unequivocally stand by our position that we did not mislead the FCC with respect to the transaction or act in any way other than with complete candor and transparency,” Sinclair CEO Chris Ripley said in an Aug. 9 statement.

To be sure, it’s unclear how much the current FCC will keep its concerns in mind the next time it reviews a Sinclair license application. An FCC spokeswoman declined to comment.

But public interest groups, along with Democratic FCC Commissioner Jessica Rosenworcel and former Democratic commission chairman Tom Wheeler, have questioned whether the commission should let the media giant hold its existing station licenses when they come up for renewal.

“Issues of candor and misrepresentation can have broader consequences during the license renewal process,” Rosenworcel said at the FCC’s Aug. 2 meeting.

The public interest groups renewed their concerns after Tribune announced its withdrawal from the deal.

“It’s reasonable to question whether the broadcaster deserves to hold any licenses to profit off the public airwaves,” Craig Aaron, president of media advocacy group Free Press, said in a statement.

The FCC has revoked broadcast TV and radio licenses in the past when it felt that license holders had misled it. Sinclair’s critics are likely to cite the FCC’s concerns about the planned divestitures when Sinclair seeks to renew broadcast TV licenses starting in 2020, or tries to win agency approval for other acquisitions.

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