Sinclair Deal Appears Headed for Hearing

O'Rielly signals he agrees there are questions of fact that need resolving
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At press time, the FCC had yet to release the hearing designation order (HDO), but it is looking more like Sinclair's proposed Tribune deal is headed for an administrative law judge hearing despite the broadcasters' efforts to fix the deal and head off that potentially lengthy process.

The draft order has been changed since it was first circulated earlier this week, but primarily to try to speed the hearing process so it does not become a de facto deal-killer in response to concerns from commissioner Michael O'Rielly, though it appears that may simply be to help the next deal, rather than this one.

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A source who has seen the final order said that there were "questions of fact on how Sinclair presented information to the commission that have to be resolved through a hearing of some sort and [FCC chair Ajit Pai] has elected to use the administrative law judge."

Sinclair has strongly denied it did anything wrong and said it made it clear to the FCC who was buying the stations and what sidecar agreements would be included.

When Ajit Pai first circulated the order July 16, he said: “Based on a thorough review of the record, I have serious concerns about the Sinclair-Tribune transaction. The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law."

On Wednesday (July 18), Sinclair withdrew sales of three stations that appeared to create issues with the FCC saying it would sell two to buyers the FCC liked and keep the third, saying that should resolve the issue.

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But the FCC source said the takeaway is there will likely be no quick fix or resolution.

As to why O'Rielly joined in the vote, an aide to the commissioner said: "He recognizes that, based on the material made available to us, there are questions of fact that need to be resolved and, begrudgingly, what's left right now is for us to send it to an ALJ. Unfortunately, that process is so horrendous that we're not naive in believing we are going to get to resolve these questions of fact."

Sinclair and Tribune have had an Aug. 8 breakup date for the deal, so that will have to be pushed back if they continue to pursue it. A court decision on the UHF discount that allowed for the deal could also come out any day and potentially unwind it as well.

"Commissioner O'Rielly has a long history of criticizing the administrative law judge process," the aide said of the changes to the order. "We shouldn't have a process where if we refer something for a hearing it means a death knell for the hearing. We did what we could to enhance the structure of the ALJ process." But, when asked if that meant it could not drag on for a couple of years, the answer was: "It probably could."

The aide said they hoped it would at least serve as precedent for future hearing draft orders.

At a D.C. event Wednesday (July 18), commissioner Brendan Carr also said he fully agreed with designating the deal for hearing, according to a source at the event. Pai and Democratic commissioner Jessica Rosenworcel had already voted it.

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