Sinclair Submits Remade Tribune Deal to FCC - Broadcasting & Cable

Sinclair Submits Remade Tribune Deal to FCC

Still discussing some station specifics with Justice
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Sinclair has submitted its new proposal to purchase Tribune stations, taking into account the deregulatory media ownership changes the FCC made in December 2018 to allow for more local station ownership, including allowing smaller-market duopolies and the ownership of more than one top station in a market in some circumstances.

That is according to an FCC filing just made at the commission as an amendment to a transfer application for Tribune's WPIX (see below).

The plan includes divestitures of WGN-TV Chicago, and WPIX-TV New York, and KSWB-TV San Diego to come under the FCC's 39% ownership cap. Sinclair does not own stations in either New York or Chicago.

According to a source, Sinclair has told DOJ it would sell certain stations, is still discussing other spin-offs, but in order to achieve a timely closing is submitting the plan to the FCC so it can start making its case-by-case evaluation of the markets where Sinclair wants to own two of the top four.

Justice looks at control of ad inventory in a market while the FCC may look at other issues when conducting its case-by-case review of market concentration.

In the amended filing, which the FCC will need to put out for public comment, Sinclair identifies the "overlap" markets where it will sell stations to comply with the duopoly rules (where two stations in a market are prohibited), asks that the FCC allow Sinclair to own two of the top four stations in two of those overlap markets and one market where Tribune currently owns a top four--one of the FCC rule changes was to allow such formerly prohibited doubling up, but only on a case-by-case basis.

It also outlines the stations Sinclair will sell to comply with the national ownership cap (39% of the national audience, but with UHF's audience only counting 50%, thanks to another FCC ownership rule tweak).

Sinclair will divest one or more station in the following markets:

  1. Seattle, Washington;
  2. St. Louis, Missouri;
  3. Salt Lake City, Utah;
  4. Oklahoma City, Oklahoma;
  5. Greensboro-High Point-Winston Salem, North Carolina;
  6. Grand Rapids, Michigan;
  7. Richmond, Virginia; and
  8. Des Moines-Ames, Iowa.

It is asking to own two of the top four stations in Greensboro-High Point Winston Salem, Harrisburg-Lancaster-Lebanon-York, Pa., and Indianapolis, Ind.

Sinclair says it now plans to retain both stations in Portland, Ore., since the FCC is now allowing duopolies in markets where there would no longer be eight, independent, voices after the purchase.

Justice is reviewing the proposed merger on antitrust grounds, while the FCC for public interest issues beyond antitrust.

The FCC stopped its informal 180-day shot clock on its vetting of the deal last month in anticipation of Sinclair's re-filing it. At press time the clock had yet to restart, but will likely re-start it when it puts the reconfigured deal out for comment.

Most of the divestiture stations will be held in a trust, where theoretically they could be parked and put into play if DOJ or the FCC want to tweak what needs selling or gets sold, according to one analyst vetting the new deal.

Tribune interim CEO Peter Kern sent the following e-mail to employees following the filing to fill them in on what the future holds and encouraging them to think positively.

Sent: Wednesday, February 21, 2018 12:43 PM
Subject: Update on Sinclair Merger

Sinclair Broadcasting Group today filed additional papers at the FCC as part of the ongoing process of seeking regulatory approval for our merger.  The filings provide some more information about how Sinclair intends to reconcile the merger with the FCC’s broadcast ownership rules, but also leaves some issues unresolved.  I have attached a summary from the filing below so that you can see how Sinclair describes its intentions in various markets.

I realize that this filing may stir up worries and concerns you have and that the waiting and uncertainty driven by the ongoing regulatory review has created challenges for all of us.  I know you would appreciate more clarity.  While we can’t give you more information than we have, I would just like to take this opportunity to remind all of you that since last May we have known change was coming, and there is no reason to assume that this change won’t be for the better.

Whether Sinclair becomes your parent company or that responsibility falls to any of a number of other very professional broadcasting entities, there will no doubt be things you love about your new owner and things you may not.  Some may have better managers, or better health insurance, or better vacation days, or better bonus plans.  Each is different and each comes with its own set of challenges and opportunities – just like Tribune.  But most important is that they all need talented and capable employees on the ground, in their markets, running great businesses.

So as we continue through the merger process, I encourage you to resist the urge to find more reason for concern.  Regardless of whether a station is slated to stay with Sinclair or be divested, it is the stations themselves that are the lifeblood of any broadcast company and remain the connection to the community and its viewers.  Remember how important your work is to your community and be confident in the quality of the work you do and the importance that work will have at whatever home you end up.

Thanks.

Peter


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