FCC Proposes $13M Sinclair Fine Over Paid Programming

Sinclair says it will contest the finding and fine
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The FCC wants Sinclair to pay eight figures for airing paid programming without the requisite disclosures.

As expected, the FCC has proposed fining Sinclair $13-plus million ($13,376,200 to be exact) for "apparently" repeatedly violating rules requiring broadcasters to disclose when they are airing paid programming, and identify the sponsor. Sinclair disputes the violations and will contest the fine.

The Notice of Apparent Liability, came in a vote by the full commission released Dec. 21, but with the Democrats dissenting, arguing it was merely a slap on the wrist. The FCC doubled the base fine (6,892,000) citing the gravity of the alleged offense and Sinclair's history of violating other FCC rules. It is also the largest-ever proposed fine for violating FCC sponsorship ID rules, FCC chairman Ajit Pai pointed out.

Pai suggested there might be other reasons why the Democrats wanted to dramatically increase the fines against Sinclair, a company both Democrats have criticized.

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"In this Notice of Apparent Liability, we are proposing a forfeiture of $13,376,200 for 1,723 apparent violations of our sponsor ship identification rules. That works out to over $7,700 per violation—a significantly higher penalty per violation than in recent cases but one that is appropriate given the factors spelled out in the Notice of Apparent Liability. By contrast, my colleagues have sought to propose a forfeiture of $48,114 per violation, or 1,504% higher than the most recent penalty we’ve imposed. 

Their position deviates so wildly from our precedent that it will no doubt strike reasonable people as suspicious. But I will leave it to others to speculate as to why they wish to punish this particular company in this particular way."

The FCC said Sinclair both aired short-form programming without disclosures, and long-form programming that disclosed it was paid, but failed to identify the sponsor, which is also required.

"Sinclair proudly supports the Cancer Foundation and its educational mission," the company said in a statement. "Any absence of sponsorship identification in these public service segments was unintended and a result of simple human error. After working to reach a reasonable settlement, we are disappointed by this NAL, which we believe is unreasonable, given the circumstances of our case and the absence of any viewer harm. We disagree with the FCC’s action and intend to contest this unwarranted fine."

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The broadcaster told the FCC as part of the inquiry that it was not required to air the disclaimers, according to the FCC, though Sinclair said it had planned to disclose the news segments but inadvertently failed to. The FCC says that despite the fact that the agreement with Huntsman required sponsorship ID announcements and that Sinclair legal staff "purportedly" instructed staffers to insert the disclosures, Sinclair was actually not required to disclose because the Huntsman agreement was actually linked to ads and digital services, not the on-air stories or long-form programs, and that the stories served a public interest goal and were similar to other HCI programming Sinclair aired without being paid. The FCC rejected both arguments.

Based on an anonymous complaint, the FCC's enforcement bureau investigated and found that Sinclair had "apparently" was paid to air programming (by the Huntsman Cancer Institute), including in local news segments, 1,400 times on 64 of its stations, and did not identify it as sponsored programming.

Sinclair also provided the programming to 13 non-owned stations more than 280 times without advising those stations it was paid programming or who paid for it.

"When a broadcast licensee fails to disclose the sponsor of paid programming, it may mislead the public into believing the paid broadcast material is a station’s independently generated news or editorial content," the FCC said. "In addition, enforcement of the sponsorship identification requirements protects competition by preventing sponsors from gaining an unfair advantage by paying stations to present commercial material as news or editorial content, while their competitors’ paid programming is properly disclosed as sponsored material."

Once Sinclair learned of the FCC inquiry, it aired announcements acknowledging that the stories were sponsored and apologizing for not including the disclosures.

"On first read, one might easily conclude that today’s enforcement action by the Republican-led FCC represents a strong stand against a company with a history of skirting FCC rules," said Democratic Commissioner Mignon Clyburn in her dissent. "But take a closer look: contrary to what the FCC majority would have you believe, the nearly $13.4 million fine levied against Sinclair Broadcast Group represents a mere slap on the wrist. Simply put, the ‘punishment does not fit the crime’ against a company that grossed more than $2.7 billion in revenue last year."

Commissioner Jessica Rosenworcel agreed. "The unprecedented volume of these violations deserves an unprecedented response," she said in her dissent. "But instead of seeking the maximum fine allowable under our rules, this notice cuts the company a break. In fact, the fine that is proposed amounts to only .5 percent of its revenue last year and only .3 percent of the value of the merger it currently has pending before this agency...[W]e offer unreasonable and suspicious favor to a company with a clear record of difficulty complying with the law."

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