No Legal Reason to Wait for Court UHF Ruling, Say Sinclair and Tribune in Defense of Deal

The FCC’s broadcast ownership rules were the subject of ongoing proceedings at the 3rd U.S. Circuit Court of Appeals for years, but the agency didn’t freeze broadcast transactions, Sinclair and Tribune said. “To the contrary, it applied the rules that were in effect at the time.” The D.C. Circuit expressly denied a request to stay the revived UHF discount, so the FCC shouldn’t act as though one were in place, said 21st Century Fox, recipient of some of Sinclair/Tribune’s divestitures, in its supportive filing. The FCC should apply the current rules, consistent with established procedure and precedent, said a filing from Howard Stirk Holdings, another divestiture buyer.

Arguments that the deal should be rejected because of its sidecar arrangements are invalid because joint sales agreements (JSAs) and shared service agreements are well within the law, the joint filing said. “Each of the agreements at issue here mirrors those the Commission has approved in multiple transactions over the last decade for a variety of broadcasters,” Sinclair and Tribune said. "The proposals here are compliant with FCC rules and policy and Petitioners have provided no justification for the Commission to use this transaction as a vehicle to change the law with respect to such arrangements." The JSAs “involve nothing more than the routine application of existing precedent” and should be approved, Howard Stirk said. “The great irony” of the deal’s opponents is that they claim to be promoting diversity and minority ownership while arguing against a transaction that would include divestitures to Howard Stirk, which is minority owned, Howard Stirk said.

Criticisms from Newsmax and others that the divestitures to Howard Stirk and others are at prices far below market value are based on flimsy evidence and don’t account for the complexities of pricing a station, Sinclair and Tribune said in a multipage footnote. “It is important to note that both the brokers and Petitioners are engaging in pure guesswork and have not performed any due diligence or reviewed specific market information or potential buyers,” Sinclair and Tribune said. Sinclair’s guarantee of financing in some of the deals is within the law, Sinclair and Tribune said. The broadcasters also targeted American Cable Association claims that numerous pieces of information were improperly withheld from the Sinclair/Tribune transaction approval documents. The “redaction of certain documents” is consistent with FCC precedent, Sinclair said.

It’s not inappropriate to approve the deal since Sinclair hasn’t specified which St. Louis station will be placed in the Sinclair Divestiture Trust or identified a specific buyer, Sinclair and Tribune said. All required information on the arrangement has been filed with the FCC, Sinclair and Tribune said. Delaying the deal over the trust plan would “be contrary to precedent and entirely negate the purpose of divestiture trusts,” they said.

Objections to the combination based on its effect on localism and must-run segments “cherry-pick from less than 3% of the programming available on Sinclair stations,” Sinclair and Tribune said. The vast majority of local programming decisions of Sinclair-owned stations are made at the local station level, they said. “Nowhere do Petitioners provide any evidence (because they cannot) that Sinclair’s stations do not cover local issues at the local station level.” Sinclair’s stations “succeed in the marketplace precisely because they focus on the interests of the local communities they serve,” the filing said.

MVPD groups attacking the deal over the implications for retrans and anti-consolidation groups over size are recycling old arguments against rules they don’t like, Sinclair and Tribune said. “The majority of petitioners have improperly opted to rehash the same unsubstantiated arguments,” Sinclair said. Such objections are “rooted in unfounded assumptions, misunderstandings of law, ignorance of the modern media landscape, a desire to silence voices with which they disagree and, in many instances, blatant self-interest,” they said. “It is inappropriate for the Commission to base its decisions on assignment applications on the impact of such transactions on freely negotiated contractual rights and obligations,” Sinclair and Tribune said of retrans-based objections to the deal.

The Sinclair/Tribune opposition “fails to address” concerns about the transaction, said deal opponent Coalition to Save Local Media in a release. “This latest filing makes clear that Sinclair’s transaction is completely reliant on the reinstatement of the UHF discount,” the group said. FCC action on the merger is “premature” until the court rules, they said. “Nothing Sinclair has put forward in this process has changed the fact that this merger is not in the public interest and should be denied.”