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Opponents to Sinclair/Tribune deal unite as Democratic lawmakers question Pai

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Opponents to Sinclair/Tribune deal unite as Democratic lawmakers question Pai

Opponents of Sinclair Broadcast Group Inc.'s proposed acquisition of Tribune Media Co. have taken another step in their efforts to block the deal, with several groups coming together to launch the Coalition to Save Local Media.

Founding members of the coalition include industry groups such as the American Cable Association, Competitive Carriers Association, NTCA—The Rural Broadband Association and the Computer and Communications Industry Association; the satellite TV company DISH Network Corp.; and independent networks such as AWE (US) channel, Cinemoi, One America News Network (US), RIDE TV and The Blaze TV (US); as well as a number of public interest groups, including the Sports Fans Coalition, Latino Victory Project and Public Knowledge.

Notably, the Coalition to Save Local Media is a 501(c)4 organization, a section of the tax code that provides exemptions for social welfare organizations. According to the Internal Revenue Service, these civic leagues or organizations are not organized for profit but are operated exclusively for the promotion of social welfare.

The groups argue the Federal Communications Commission should deny the transaction on the belief that it will harm the public interest. The groups warn that consolidation will hurt localism and diversity. Additionally, they argue a combined Sinclair and Tribune will be able to demand higher retransmission consent prices, driving up cable bills for consumers and leaving distributors with a smaller programming budget to spend on carrying independent networks.

"If the Sinclair – Tribune merger is approved, consumers can expect higher cable bills, less meaningful choices, and a more homogeneous local news offering from broadcasters within a market and cross our country," Robert Herring, founder and CEO of A Wealth of Entertainment and One America News Network, said in a statement.

A Sinclair representative did not immediately respond to a request for comment, but the company 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.

The formation of the coalition comes one day after three democrats holding leading position on the House Energy and Commerce Committee sent a letter to FCC Chairman Ajit Pai asking whether he had shown preferential treatment to Sinclair in the months since taking office.

In the letter, sent Aug. 14, the representatives — Rep. Frank Pallone Jr. of New Jersey, ranking member of the Energy and Commerce Committee; Mike Doyle of Pennsylvania, ranking member of the Subcommittee on Communications and Technology; and Diana DeGette of Colorado, ranking member of the Subcommittee on Oversight and Investigations — noted that published reports in recent months have suggested "a pattern of preferential treatment for Sinclair."

"We hope this letter will serve as an opportunity to respond to reports suggesting that you have failed to exercise adequate independence as FCC Chairman and that may have resulted in the agency giving unusual and possibly preferential treatment to Sinclair," the three Democrats wrote.

Specifically, they pointed to recent actions at the FCC that have paved the way for Sinclair to become larger through a series of M&A transactions, including the commission's reinstatement of the UHF discount. The discount, which was eliminated in 2016 under former FCC Chairman Tom Wheeler and then reinstated in April under current FCC Chairman Ajit Pai, allows stations broadcasting in the UHF spectrum — or on channels 14 to 51 — to attribute only 50% of their TV households in their designated market areas toward the overall national ownership cap. Under the current cap, a single broadcast station group cannot own TV stations that together reach more than 39% of U.S. TV households.

Pai has said that the discount was reinstated until a full review of the FCC's media ownership rules and the 39% cap can be completed.

The lawmakers also pointed to the recent approval of Sinclair's purchase of Bonten Media Group, noting the commission "approved Sinclair's multimillion dollar deal … shortly after the FCC revoked a processing guidance that would have required close scrutiny of the transaction." In early February, the commission rescinded a number of orders related to media, including one that promised close scrutiny of any arrangement involving joint sales or local marketing agreements.

The letter also raises concerns about "a favorable relationship" between Sinclair and the Trump administration, and notes that Pai has personally held multiple meetings with Sinclair executives.

"Taken together, the volume of these interactions raise questions about the objectivity of recent FCC actions befitting Sinclair," they said.

Asked about the letter, an FCC representative said the commission declined to comment.