Sinclair Broadcast Group Inc. has proposed to sell but still operate TV stations in New York, Chicago and other cities to win regulatory approval of its $3.9 billion purchase of Tribune Media Co.
Sinclair said it would sell stations including WPIX in New York and WGN in Chicago, then operate them in agreement with new owners it didn't identify, according to a company filing Wednesday. The maneuver would help Sinclair, which would grow to more than 200 stations, keep from exceeding a national media ownership cap by knocking two big cities out of the calculation.
"Our filing brings this transaction into compliance with the ownership rules," said Rebecca Hanson, a Sinclair spokesman.
Critics on Thursday urged skepticism by regulators vetting the deal, at the Federal Communications Commission and the Justice Department.
"This is a recipe for circumventing ownership limits," said Gene Kimmelman, president of the Public Knowledge, a policy group that opposes the deal. "We remain hopeful that, if the FCC refuses to do its job and reject this transaction as contrary to the public interest, the Department of Justice will do major surgery to prevent competitive harm to consumers."
At the FCC, Chairman Ajit Pai said Thursday that Sinclair's filing was under review "and we don't have any news to report just yet."
Pai declined to discuss the New York and Chicago markets specifically and said whether a sharing arrangement is appropriate depends on facts in each market where the tactic is proposed. "I can't opine on the abstract," he said.
Pai, a Republican, has defended sharing arrangements as helping smaller stations survive. Among his first actions after being appointed by President Donald Trump, Pai last year rescinded FCC guidance by his Democratic predecessor that called for FCC officials to carefully scrutinize shared-service agreements.
Commissioner Jessica Rosenworcel, a member of the FCC's Democratic minority, said Thursday that she has "deep concerns" about Sinclair's request and about the proposed merger.
"There's something suspect about media policy at this agency," Rosenworcel said at a news conference. "Every single action we have taken uniquely benefits Sinclair Broadcasting and its efforts to combine with Tribune."
Democrats have complained that Sinclair has enjoyed a streak of favorable rulings at the FCC, and the agency's inspector general is said to be investigating whether Pai improperly pushed for rule changes that helped clear the way for Sinclair's Tribune deal -- an accusation characterized as "absurd" by an FCC spokesman.
The FCC under Democrats in 2014 moved to restrict sharing agreements that leave a broadcaster in de facto control while titular owners play a diminished role. Gigi Sohn, who was part as that effort as an FCC aide, called Sinclair's proposal "a complete and total evasion of the rules."
Sinclair Broadcast Group Inc. owns Little Rock's KATV, an ABC affiliate
Sinclair in its filing Wednesday also said that it will sell stations in eight markets to comply with separate rules limiting ownership of stations in a local markets. Some, such as Seattle, will include service agreements. Others, such as St. Louis, would not, according to the filing.
The filing signals "that regulatory approval should be forthcoming" with an expected closing date in April, Wells Fargo analyst Marci Ryvicker said in a note.
Sinclair agreed last year to buy Tribune's 42 TV stations, giving a broadcaster known for its conservative leanings a wider presence.
Business on 02/23/2018