Surprises

by Karl Bode


Filed Under:
ajit pai, cronyism, fcc, local news, media ownership, merger

Companies:
sinclair



The FCC Mysteriously Retreats From Sinclair Cronyism, Potentially Dooming Controversial Merger

from the about-face dept

If you've been paying attention, you've probably noticed that Sinclair Broadcast Group's $3.9 billion merger with Tribune Media has been widely derided as terrible. The company, already under routine fire for content that's more lobotomized pablum than news, hopes to seal a deal that would give it ownership of more than 230 local broadcast stations reaching more than 72% of the nation. Given Sinclair's inflammatory and facts-optional reporting, that's generally seen as a problem for a country where daily discourse is already a raging dumpster fire, and local reporters are already struggling to survive.

For much of the last year the FCC has been going to comical lengths to pave the way for Sinclair's deal. From attacking the law that prohibits any one broadcaster from dominating more than 39% of local broadcast audiences, to restoring obscure bits of discarded regulation (like the UHF discount) simply to let Sinclair bullshit its way under said limit, the FCC has been making it very clear it hoped to rubber stamp the deal. It was so clear, Ajit Pai found himself the subject of a nonpartisan corruption investigation by his own agency into whether he coordinated the effort with Sinclair.

But the obvious cronyism came to an abrupt and strange end Monday morning, when Pai announced that he suddenly developed some reservations about Sinclair's justifications for the deal, and stated he'd be launching an order that would put the merger under additional scrutiny by an administrative law judge:

You have to think the FCC investigation into Pai's behavior here played more than a small role in him suddenly and uncharacteristically caring about factual data. Pai, who has pretty obvious post-FCC political aspirations, must have seen some pretty damning evidence to engage in such a stark reversal from a full year's worth of merger cheer leading. The deal's allies at the agency had previously tried to claim that a long list of rule changes perfectly timed to aid Sinclair (one of which occurred three weeks before the deal was even announced) were all just entirely coincidental.

Sinclair had been pushing hard for the FCC to eliminate the ownership cap entirely (which the FCC isn't legally authorized to do, but showed interest in attempting anyway). But Sinclair had also been engaged in all kinds of gamesmanship to try and sneak in below the line if that gambit failed, including trying to offload some stations to subsidiaries, shell companies and partners to make it look like they were adhering to the law. Reuters obtained a leaked version of the draft order which indicates that even Pai was forced to admit that Sinclair engaged in rampant "deception" to try and railroad the deal through:

"Sinclair’s actions here potentially involve deception” in its application to acquire Tribune and in reference to the divestiture of WGN, a TV station in Chicago, according to Pai’s draft order, not yet public but seen by Reuters.

The draft order said “this question of misconduct does not bear” only on the WGN transaction but on the entire merger application."

In short, it looks like Sinclair was so immeasurably full of shit during their merger sales pitch and various law-dodging shell games that even Ajit Pai couldn't rubber stamp the proposal, which is saying something about the depths Sinclair was likely willing to sink to. It's likely we'll see more details in the wake of a court fight over the FCC's UHF discount move, and the inquiry into Pai's behavior.

Again, if you've watched Pai try and twist the fabric of reality itself to make AT&T and Comcast happy, this is a pretty shocking about face. For much of the last year it seemed clear Pai was blisteringly-eager to rubber stamp the deal with the usual 3-2 partisan agency vote. But an order shoveling merger review toward an administrative hearing is traditionally seen as a death knell for such deals, meaning Sinclair's multi-year bid to lie its way to market domination may have just hit a dead end -- courtesy of the most unlikely of sources.


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