Sinclair Broadcasting released a lengthy statement Monday (July 16) after FCC Chairman Ajit Pai signaled he was designating the Tribune deal for hearing before the FCC's administrative law judge. Pai said: "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."
In addition, according to someone who has seen the draft order, it raises the allegation that Sinclair may have been less than candid with the FCC or was guilty of misrepresentation.
Sinclair was having none of it. It said it had misled noone, had complied with FCC rules, been transparent about what it was trying to do, and was willing to adjust the merger yet again--it has submitted five versions so far-- to avoid the hearing and close the deal.
“Sinclair was shocked and disappointed today by the news that FCC Chairman Pai was circulating an order proposing to designate our acquisition of Tribune for an administrative hearing. Although the actual Hearing Designation Order (HDO) has not yet been released, press reports indicate that a leaked version of the HDO [haering designation order] suggests that Sinclair may have engaged in misrepresentation or lack of candor. To the extent that the HDO does in fact include any such allegations, we deny such allegations in the strongest possible manner,” Sinclair said.
Sinclair has maintained throughout that it was complying with all the FCC rules, while also making clear it wanted to use those rules to achieve the kind of scale it said it needed to compete with MVPDs and over-the-top players without any limitations on its audience reach.
“Throughout the FCC review process of this transaction, we have had numerous meetings and discussions with the FCC’s Media Bureau to make sure that they were fully aware of the transaction’s structure and basis for complying with FCC rules and meeting public interest obligations," Sinclair said. "These structures are consistent with structures that Sinclair and many other broadcasters have utilized for many years with the full approval of the FCC. During these discussions and in our filings with the FCC, we have been completely transparent about every aspect of the proposed transaction. We have fully identified who the buyers are and the terms under which stations would be sold to such buyer, including any ongoing relationship we would have with any such stations after the sales. We have filed all relevant agreements documenting such terms as required by FCC rules."
Sinclair signaled it would be willing to address the issues with buyers the FCC doesn't like, but says it has always been above board about what it was trying to do.
“While we understand that certain parties which oppose the transaction object to certain of the buyers based on such buyers’ relationships with Sinclair, a situation we are prepared to address if the FCC agrees with such views, at no time have we misled the FCC in any manner whatsoever with respect to the relationships or the structure of those relationships proposed as part of the Tribune acquisition. Any suggestion to the contrary is unfounded and without factual basis.
“We are prepared to resolve any perceived issues and look forward to finalizing our acquisition of Tribune Media,” it said. “The proposed merger of Sinclair Broadcast Group and Tribune Media will create numerous public interest benefits and help move the broadcast industry forward at a time when it is facing unprecedented challenges. We look forward to working with regulators to make the merger a reality.”
Tribune said it would check out the order when it is made public and work with th eFCC as well.
“Tribune Media was disappointed to learn that the Chairman had circulated an order designating certain issues for consideration by an Administrative Law Judge," Tribune said in a statement. "It will review the FCC’s hearing designation order when released and expects to work with the FCC to explore ways to address the concerns identified. Until we have reviewed the order it is difficult to explain the potential issues it might create for the transaction. Fortunately, Tribune's operations have been strong in 2018 and our team has done a terrific job of maximizing the value of the business through this extended regulatory approval process.”