For several groups opposing Sinclair Broadcast Group Inc.'s proposed purchase of Tribune Media Co., no conditions or divestitures would be enough to make the broadcast deal palatable.
Sinclair is set to acquire Tribune's 42 stations in 33 markets, creating the largest television broadcast company in the United States with a reach covering 72% of U.S. homes across 108 markets.
The deadline for interested parties to file formal opposition to the deal with the FCC in the form of a petition to deny was Aug. 7. Although several groups requested more time in the commission's review of the transaction, that request was denied. Sinclair, Tribune and any other deal proponents have until Aug. 22 to file a formal reply.
"Sinclair/Tribune would produce a TV station behemoth that's unprecedented in both local and national size and power," American Cable Association CEO Matthew Polka said during an Aug. 7 conference call, noting that the combined company would own more than 200 full power TV stations nationwide. In addition, the combined entity would own two top-four rated affiliates in 10 of the 14 markets where Sinclair and Tribune both operate. Currently, the FCC's local TV ownership rule limits a single entity from owning more than one top-four rated station in a single market, though the commission has signaled that rule, among many other regulations, could be up for review.
Sinclair has argued the transaction will serve the public interest by increasing the combined entity's operational efficiencies, allowing Sinclair to invest the savings in upgraded stations facilities and expanded local news coverage.
One potential solution to concerns around the combined entity's reach would be divestitures. Sinclair has signaled it is open to working with regulators, though CEO and President Christopher Ripley said in May that he did not believe Sinclair and Tribune "need to sell any" stations to win regulatory approval. "When you take a look at all the overlaps, they really have no impact on overall competition. And we hope that the regulators will agree with us," Ripley said.
But according to former Democratic FCC Commissioner Michael Copps, one of the deal's opponents, divestitures and conditions would not be enough to ensure the deal serves the public interest. "We're talking about something that goes to the fundamentals of democracy and free speech. And there's no compromising on that when you get a deal that stinks as bad as this deal does," Copps said during the conference call.
Beyond the overall reach of the combined company, a major concern for Copps is Sinclair's approach to news coverage. He and others have noted the short commentary programs the company produces in its headquarters and requires its myriad stations to run. Recent episode titles from one such program, "Behind the Headlines with Mark Hyman," include "Fake News," "Anonymous Sources," "Clinton Threat" and "Dishonest New York Times." Another commentary program from Sinclair, "Bottom Line with Boris," is hosted by former Trump White House official Boris Epshteyn.
Some industry observers, however, have noted that Sinclair's local news segments represent only a small fraction of the overall programming carried on its stations. The bulk of programming is comprised of network shows and syndicated content. Moreover, there is no mechanism for the FCC to consider content balance issues as part of its review of the deal.
Charles Herring, president of One America News Network (US), a conservative-leaning news network owner, sounded another area of concern. He noted that as Sinclair gets bigger, it can demand higher retransmission consent fees for its broadcast stations, as well as higher affiliate fees for its recently acquired cable network, Tennis Channel. "This raises prices for consumers and more importantly, it consumes programming budgets," Herring said during the Aug. 7 conference call, noting that if pay TV providers are paying higher rates to Sinclair, it leaves them with less money to pay to smaller independent network owners.
"With the market strength Sinclair will have post-merger, it could take any channel it wants, regardless of the merit of that channel with the consumer or the cable company, and basically force it on the cable company and thus on consumers," Herring said.
In a petition to deny filed with the FCC on Aug. 7, DISH Network Corp. echoed a concern over higher retrans fees. Citing a study from Janusz Ordover — an emeritus professor of economics at New York University and a former deputy assistant attorney general for economics at the Antitrust Division at the Department of Justice under President George H.W. Bush — DISH said there is a direct correlation between retrans fees and the overall size of the broadcast group as well as to the number of markets where the group controls more than one station. In other words, the study, which was commissioned by DISH, found that as a broadcast group gets bigger, its retrans fees get higher.
"MVPDs like DISH could successfully hold off above-normal price increases if threatened with a blackout by Sinclair or Tribune alone, but could not do so if threatened with a blackout of all New Sinclair stations at the same time," the company explained.