Sinclair Withdraws Cunningham Station Sales

But will hold on to WGN
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Sinclair has withdrawn three station sales to third parties with ties to the company in hopes it will resolve FCC issues with the Tribune deal. 

Sinclair said it was doing so in response to press reports of issues with those stations and not from an FCC document outlining the issues.

FCC chairman Ajit Pai this week circulated an order designating parts of the deal for a hearing before an FCC judge, saying that some of the station spinoffs appeared to be illegal. 

Sinclair has maintained it was within FCC regs, but Wednesday (July 18) said it was resubmitting the deal yet again, withdrawing the pending divestitures of KDAF-TV Dallas and KIAH Houston to Cunningham Broadcasting and Tribune's WGN to WGN-TV LLC. 

It said it would put the Dallas and Houston stations in a trust for sale to another party after the deal closing, while Sinclair says it will hold on to WGN instead of sell it, "which is, and has always been, fully permissible under the national ownership cap," Sinclair said. It als said the deal would be under the 39% audience reach cap (38.86% with the UHF discount) even retaining WGN.

Sinclair’s ownership of WGN-TV complies with theLocal TelevisionMultiple Ownership Rule and the Radio-Television-Cross-Ownership Rule becauseSinclair does not currently own any TV stations in the Chicagomarket and will acquire one radio station in connection with the merger transaction," Sinclair told the FCC in its notice of the deal revision.

Related: Sinclair Fires Back

The company also reiterated it had done nothing wrong--the FCC hearing order used terms like "lack of candor" and "misrepresentation," according to a source who has seen the document.

In announcing the order, Pai had 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."

"Sinclair, at no time have we withheld information or 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," the company said. 

Sinclair signaled that this, its sixth version of the deal, should be the charm. 

"There can be no question regarding misrepresentation or character given that Sinclair has fully disclosed all terms of all aspects of the transactions it has proposed. The FCC’s reported concerns with sales to certain parties have been eliminated in light of the withdrawals of the applications relating to Dallas, Houston and Chicago. Accordingly, we call upon the FCC to approve the modified Tribune acquisition in order to bring closure to this extraordinarily drawn-out process and to provide certainty to the thousands of Tribune employees who are looking for closure."

"Earlier this week, I commended FCC Chairman Ajit Pai for his fairness and integrity for recommending action against Sinclair. I strongly urge him to stick to his and the FCC’s plan to move this merger to a hearings phase so that the disputed matters can be fully resolved by an independent judge," said Newsmax CEO Chris Ruddy, a vocal opponent of the deal in both previous and current forms.

“Three FCC Commissioners have voted to send Sinclair’s transaction to an Administrative Law Judge because they suspect that Sinclair has lied about it," said American Cable Association President Matt Polka. "Sinclair can’t rescue this Titanic by shuffling the deck chairs.”

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