News Articles

Sinclair loses, wins

FCC fines it for controlling Glencairn but allows Sullivan buy 12/16/2001 07:00:00 PM Eastern

Ending a three-year investigation, the FCC declared last week that Sinclair Broadcasting exercised illegal control of business partner Glencairn Ltd.

Despite handing a legal victory to civil-rights groups that had spurred the review, the decision failed to yield their ultimate goal: either blocking Sinclair's unrelated purchase of 14 TV stations from Sullivan Broadcasting or revoking some licenses of the Baltimore-based station group.

Instead, the FCC fined each company $40,000 and approved the acquisitions. The commission's three Republicans judged the companies liable for misinterpreting FCC policies but found no intent to mislead the agency.

Civil-rights groups claimed that Sinclair used Glencairn to evade the now-defunct ban on ownership of two TV stations in the same market. Sinclair countered that Glencairn was a legal local marketing agreement (lma) that allowed the larger company to operate the station while Glencairn officials handled corporate decisions.

Democratic Commissioner Michael Copps wanted to pursue a tougher sanction. Sinclair has repeatedly "stretched the limits" of FCC ownership rules, he said.

Putting the best possible face on the ruling, Glencairn President Edwin Edwards said, "We won," noting that neither his company nor Sinclair gave in to alleged demands from Jesse Jackson and the Rainbow/PUSH Coalition for a financial settlement in return for dropping opposition to the Sullivan deal.

Rainbow/PUSH attorney David Honig countered that the FCC decision was too soft. "The commission found there was no intent to mislead. But what the record shows and what the commission said are quite different." Rainbow/PUSH hasn't decided whether to appeal.

Several factors that came to light during the investigation contributed to the finding that Edwards, a former Sinclair employee, did not exercise control of his company:

  • His incorrect report on the amount of debt Glencairn would assume with the purchase of several Sullivan stations.

  • Purchase rights held by Sinclair for Glencairn stations at prices well below market rate.

  • Glencairn's agreement to sell all but two of its stations to Sinclair as soon as the FCC relaxed rules restricting ownership of local television stations.

The companies may appeal the decision at the FCC or ask for a review by federal appeals judges.

The FCC had no problem with the civil-rights group's initial complaint: that Edwards was a front for Sinclair because he owns only 3% of Glencairn's common stock while relatives of Sinclair shareholders own 97%. Those ties are too tenuous to prove Sinclair control of Glencairn, the FCC said.

The FCC did block one sale to Sinclair, the transfer of WFBC-TV Anderson, S.C., on grounds that the deal would have left fewer remaining independent stations than the eight necessary to permit a new duopoly. The duopoly "voice test" is also a bitter point of contention between Sinclair and the FCC. The company has asked a federal appeals court to strike down the limit. Sinclair could be forced to sever ties to four LMAs in Ohio, South Carolina and West Virginia.

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