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FCC Approves Sinclair/Allbritton Deal - Broadcasting & Cable

FCC Approves Sinclair/Allbritton Deal

But Media Bureau says it has issues with Cunningham LMA in Charleston
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The FCC's Media Bureau Thursday approved Sinclair's purchase of Allbritton TV stations and denied petitions to deny the deal.

"We conclude that, based on the record before us, the transferees are fully qualified to hold the licenses and that grant of the applications will serve the public interest, convenience, and necessity," the bureau said, but not without caveat.

That came on day 327 of its informal 180-day review of the deal—but almost a year to the day since it was announced—and followed Sinclair's decision earlier this year to restructure the deal to address telegraphed FCC concerns about deals with sharing agreements that included associated financial arrangements.

Media Bureau Chief Bill Lake made clear the approval was conditioned on all of Sinclair's adjustments to the deal mae after the FCC signaled the original deal would not pass muster.

Those are:

• "Consistent with DOJ review, Sinclair will divest the station in the Harrisburg market.

• "To comply with our local TV ownership rule, Sinclair will deliver the programming of stations in the Birmingham and Charleston markets via digital multicasting.  This means that Sinclair will put the full programming of the stations on the digital signal of the stations it already owns.  The licenses of the Allbritton stations that previously broadcast that programming will therefore be returned to the Commission.  Most importantly, consumers will lose no programming currently available to them.

• "The originally proposed sidecar arrangements with Howard Stirk Holdings and Deerfield will not be included in the transaction.

• To comply with our local TV ownership rule, Sinclair will terminate an improper sharing arrangement in the Charleston, South Carolina market."

The caveat: While the FCC said Rainbow PUSH had not made a case for blocking the deal, and denied their petition, the bureau did say that it had "concerns regarding an LMA that had existed between Sinclair and Cunningham in the Charleston market." The Media Bureau said it believed "the facts show that Sinclair apparently violated the local TV ownership rule with respect to its continued operation of the LMA in the Charleston market, and we plan to issue an order addressing this potential violation specifically." 

The Bureau said that was not enough to block the deal, but it is still concerned.

"We conclude that the potential violations uncovered in this proceeding do not involve conduct likely to impact the future operation of other stations and that we have adequate enforcement remedies to address them," it said. "Nonetheless, we do note that proceedings raising potential character allegations against Sinclair remain open, including our review of the operation of the LMA in the Charleston market, and should the evidence in any of those proceedings demonstrate that Sinclair does not possess the requisite qualifications to remain a licensee, we will take appropriate action."

That action notwithstanding, the FCC said those potential violations do not call into question Sinclair's fitness to be a licensee. "Although the parties were clearly aware of the attribution rule and chose to proceed with the LMA nonetheless, Sinclair states that it relied on what it believed to be the continued viability of a 2001 stay of enforcement of the new rules," said the Bureau. 

The Department of Justice already said it had no trouble with the deal so long as Sinclair sells Allbritton's ABC affiliate WHTM Harrisburg-Lancaster-Lebanon-York, which Sinclair plans to do, and in the interim does not control that station between the deal's approval and that sale. That promise was made in a "hold separate" agreement struck between DOJ and Sinclair. Sinclair announced June 23 that Media General would acquire WHTM for $83.4 million.

On July 22, DOJ signaled it was OK with the deal. That followed the court's approval of that "hold separate" agreement.

Sinclair announced July 29, 2013, that it had struck a $985 million deal for Allbritton's TV stations, including WJLA Washington, and its NewsChannel 8 regional cable news net. At the time, the deal was expected to close by the fourth quarter, but the FCC under chairman Tom Wheeler has been going over deals involving sharing arrangements with a fine-tooth-comb and signaled they would take extra time to vet.

In March, following signals from the FCC that it was giving sharing deals the eagle, some argued evil, eye, Sinclair restructured the deal to get rid of the shared services arrangements the FCC is looking askance at in some circumstances. That included stations in South Carolina and Alabama slated to go dark as part of Sinclair's effort to get the FCC to approve the deal.

Campaign Legal Center, Common Cause, Sunlight Foundation last week tried to use their complaint against Allbritton's WJLA Washington over its political ad filings as an informal last-minute objection to the deal.

FCC commissioner Ajit Pai suggested Sinclair and the viewing public had to pay a high price for complying with the FCC's view of sharing agreements.

"Today, the FCC’s crackdown on joint sales agreements claims three more victims: two television stations in the Birmingham, Alabama market (WCFT and WJSU) and one television station in Charleston, South Carolina (WCIV)," he said. "This time, the hammer falls as part of the agency’s review of the Sinclair/Allbritton transaction. Under the parties’ original proposal and the rules that were in effect when the transaction was presented to the Commission, these three stations would have continued providing local service to their communities. But because of the Commission’s new rules, the Media Bureau’s order requires them to go dark within sixty days."

"How does this outcome serve the cause of diversity? And how does this outcome serve the cause of competition? In Charleston, South Carolina, for example, WCIV would have been owned and operated by Howard Stirk Holdings, Inc., an African-American owned broadcast company. But apparently the Commission believes that it is better for that station to go out of business than for Howard Stirk Holdings to own the station and participate in a joint sales agreement with Sinclair. I strongly disagree. And so too, I’ll bet, would consumers in Charleston."

Pai has argued that sharing arrangements benefit diversity and has criticized the FCC's decision, which he opposed, to make most joint sales agreements attributable as ownership interests.

"Finally, the FCC has begun to address the schemes that Sinclair Broadcast Group and a few other group owners have used to evade the Commission’s TV ownership rules," said veteran public interest lawyer Andrew Schwartzman. "We don’t need more consolidation, and I certainly don’t relish the prospect of Sinclair’s cost-cutters taking over a network affiliate in Washington, D.C. However, the FCC took steps to stop Sinclair's blatant abuse of the ownership rules, and I hope this augers well for the future."

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