Sinclair Offers to Alter Allbritton Deal to Comply With Media Bureau Objections
Sinclair offered to rearrange portions of its proposed deal to buy Allbritton’s TV stations for about $985 million to keep some sharing arrangements flagged by the FCC Media Bureau from losing grandfathering protection, said an ex parte letter posted online Friday (http://bit.ly/1mhVzM3). Though Sinclair had initially argued that the rearrangements were unnecessary (CD Dec 12 p5), the company said it now “believes that waiting for resolution of its concerns may result in undue delay in the processing of the pending applications.” The proposed rearrangements are “a good-faith effort to comply with the rules as they've been explained to us,” said Sinclair General Counsel Barry Faber in an interview. FCC Chairman Tom Wheeler said recently that he wants to look differently at what some call “shell corporations” that evade local TV ownership rules (CD Jan 13 p1).
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The bureau disputed previous Sinclair arguments that the local marketing agreements (LMAs) in question would still be covered under grandfathering protections even if Sinclair changed the stations involved in them. “Any change” in the stations involved in a combination enjoying grandfathering protection eliminates that protection, said the bureau in a letter Friday. Sinclair’s position drew scorn from a group often opposed to media deals. “Yet again, Sinclair is attempting to skirt the Commission’s rules so that it may continue calling the shots and monopolizing local media markets,” said Free Press Policy Counsel Lauren Wilson in an email. Free Press has filed several opposition filings to the sharing arrangements involved in the Allbritton deal (CD Oct 28 p5).
The bureau originally asked Sinclair to “amend or withdraw” deals involving stations in Charleston, S.C., Birmingham, Ala., and Harrisburg, Pa. (CD Dec 9 p5). The markets have stations owned by Cunningham Broadcasting already involved in grandfathered LMAs with Sinclair. As part of the Allbritton deal, Sinclair had proposed to transfer some of those stations to Cunningham and other affiliated companies, replacing some of the stations involved in LMAs with others. Those transfers would break the grandfathering, the bureau has said, meaning the stations ostensibly owned by affiliated companies like Cunningham would be attributed to Sinclair for the purpose of the commission’s ownership rules.
Sinclair’s new proposal to the bureau offered to rearrange the transactions in Birmingham, so none of the stations involved in LMAs would change. In Charleston, Sinclair proposed modifying the sharing agreement to a combination shared services agreement and joint sales agreement, which it said would be in compliance with ownership rules. In Harrisburg, Sinclair proposed selling one of the affected stations to a third party, and then restructuring the agreement to comply with ownership rules. “It is believed that this would satisfy the Commission’s concerns as to the grandfathered status of the local marketing agreement,” Sinclair said. The bureau didn’t comment on whether Sinclair’s proposed rearrangements would address the issues raised in its letter. “We do not see how shuffling assignments among nominal licensees addresses the Commission’s concerns,” said Free Press’s Wilson. -- Monty Tayloe (mtayloe@warren-news.com)