Sinclair/Allbritton Approved
The FCC Media Bureau approved Sinclair’s $963 million buy of Allbritton’s TV stations Thursday evening (http://bit.ly/1lAXiJr). Though commissioner offices are typically notified of Media Bureau actions on delegated authority 48 hours before they're announced, word of the Sinclair/Allbritton approval was not disseminated until the middle of the day Thursday, according to FCC officials. Industry officials have expected the deal to be approved this week since the Department of Justice signed off on it with a consent decree last week (CD July 22 p4). Although the approval was announced after our deadline, FCC officials told us the order accepts the concessions previously announced by Sinclair to come into compliance with the FCC’s rules on sharing arrangements, and conditions the deal on the same single station divestiture to Media General required by DOJ. The deal’s approval had a July 27 deadline that would have allowed either Sinclair or Allbritton to abandon the transaction.
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The Sinclair/Allbritton deal is much changed from its original incarnation, when it involved eight Allbritton TV stations and Allbritton’s Washington-area 24-hour local news cable operation, NewsChannel 8. After being altered numerous times to comply with FCC policies on sharing arrangements that shifted as the deal was awaiting regulatory approval, Sinclair will now acquire KATV Little Rock, WJLA Washington, KTUL Tulsa, WSET-TV Lynchburg, Virginia, and Newschannel 8. The other stations, which were involved in sharing arrangements and located in places where Sinclair owned other stations, have been excised from the deal. Sinclair did not comment.
Under the deal, Sinclair will allow WCFT-TV and WJSU-TV in Birmingham, Alabama, and WCIV-TV Charleston, South Carolina, to go dark, and transfer their programming to multicast channels on existing Sinclair stations in those cities, FCC officials told us. Sinclair proposed that idea in a letter to the Media Bureau in May, and as requested by Sinclair, the company will get 60 days to make arrangements for the multicasting, the officials said. The order also echoes the DOJ consent decree, the officials said, requiring Sinclair to sell WHTM-TV in Harrisburg, Pennsylvania, to Media General, a plan that was first announced by Sinclair last month (CD June 24 p16), the FCC officials said. The order also requires Sinclair, as it offered last month, to sell its interest in WTAT-TV in Charleston, South Carolina, to Cunningham Communications, which already owns the station’s license, the FCC officials said. Sinclair had provided services to WTAT through a sharing agreement.
FCC Commissioner Ajit Pai characterized the stations going dark as “victims” of the FCC’s sharing arrangement rules. Since African-American-owned broadcaster Howard Stirk Holdings had asked the FCC to allow it to operate WCIV under a sharing arrangement through a waiver before Sinclair decided to shutter it, Pai attacked the closings as harming diversity. “The Commission believes that it is better for that station to go out of business than for Howard Stirk Holdings to own the station and participate in a joint sales agreement with Sinclair,” said Pai. “I strongly disagree. And so too, I'll bet, would consumers in Charleston."
"The FCC took steps to stop Sinclair’s blatant abuse of the ownership rules, and I hope this augers well for the future,” said Andrew Schwartzman, senior counselor at Georgetown Law’s Institute for Public Representation. He characterized Sinclair’s decision to shutter three stations as a political move rather than a practical one. Instead of selling the stations in question, “Sinclair chose instead to grandstand by proclaiming that it was somehow ‘forced’ to turn in their licenses,” Schwartzman said. Closing the stations is actually more profitable, he said. “Sinclair eliminates competition in those markets and gets a huge tax write-off while still keeping its network affiliations."
The order approving the deal “exemplifies the careful scrutiny the Bureau will provide to broadcast transactions that propose new combinations of sharing arrangements and financial entanglements between a dominant licensee and a so-called sidecar entity,” said Media Bureau Chief Bill Lake in a released statement. The Media Bureau “will not allow such combined arrangements to undermine the local TV ownership rule, which is in place to ensure competition and diverse voices on the airwaves."
The current form of the deal is a victory for Free Press, “because we got everything we wanted,” said Policy Counsel Lauren Wilson. Free Press filed a petition to deny the deal, along with ACA and the Rainbow/PUSH Coalition. According to eighth-floor officials, the order approving the merger declares the Free Press petition and most of the ACA petition moot because of Sinclair’s changes to the deal, which eliminated the sharing arrangements that were the focus of both petitions. The Rainbow/PUSH Coalition petition, which asked the FCC to use the Sinclair/Allbritton deal to revisit a transaction from 2004, is denied by the order, along with part of the ACA petition, the FCC officials said.
The Media Bureau’s handling of the Sinclair transaction is already having an effect on the kinds of transactions that broadcasters ask the commission to approve, said Drinker Biddle broadcast attorney Howard Liberman. “People are going to be less aggressive in pushing the limits than they were before,” said Liberman. Since the new JSA rules allow existing combinations to be grandfathered for two years, some potential transactions may not be worth the likely divestitures that would accompany bringing a transaction that involved sharing arrangements to the commission, he said. “This is how future deals should be handled,” said Wilson. “People should be warned that trying to work around the JSA order to stifle competition won’t work.”