FCC Forced To Fine Sinclair $48 Million For Bullshitting Regulators

from the not-gonna-fix-the-bigger-problem dept

Last year when Sinclair attempted to acquire Tribune Broadcasting for a cool $3.9 billion, you might recall the company was accused of some highly dodgy behavior in order to get the deal done. Despite the FCC doing its best to neuter most media consolidation protections to help move the deal forward, the union would have still resulted in the merged company violating media ownership limits and dominating local broadcasting in a huge number of new markets.

To get around those limits, Sinclair allegedly got, uh, creative. Consumer groups accused Sinclair of trying to offload several of its companies to Sinclair-owned shell companies to pretend the deal would remain under the government's ownership cap. The company also tried something similar in trying to offload some stations to friends and other partner companies at highly discounted rates, allowing it to technically not "own" -- but still control -- those stations.

It was all so dodgy that even the Ajit Pai FCC, which had initially been doing cartwheels to clear the way for the merger, had to back away from its support of the deal, shoveling deal approval off to an administrative law judge for review (aka the "kiss of death"). Tribune was then forced to kill the merger, and quickly thereafter filed a lawsuit against Sinclair for monumentally flubbing the deal.

Fast forward to this week, and the FCC has finally issued a $48 million fine for repeatedly misleading regulators. In a statement, FCC boss Ajit Pai criticized Sinclair, but also criticized those insisting the company's broadcast licenses should be stripped away:

"Sinclair’s conduct during its attempt to merge with Tribune was completely unacceptable,” said FCC Chairman Ajit Pai. “Today’s penalty, along with the failure of the Sinclair/Tribune transaction, should serve as a cautionary tale to other licensees seeking Commission approval of a transaction in the future. On the other hand, I disagree with those who, for transparently political reasons, demand that we revoke Sinclair’s licenses. While they don’t like what they perceive to be the broadcaster’s viewpoints, the First Amendment still applies around here."

Sinclair is, of course, under "political" fire for the fact that the company has been hoovering up quality local news outlets and replacing them with what, in many instances, is little more than political propaganda, something exposed by that viral Deadspin video. Pai was, of course, fine with that aspect of Sinclair's effort, which annoyed those trying to reform the media sector and the rules governing the use of (purportedly) publicly-owned airwaves:

Pai's go to move is to always simply dismiss any criticism of his agency or industry as "political." But there's some very legitimate questions here about what it means to use citizen-owned airwaves to broadcast propaganda, especially given the consolidation in media has decimated quality local news broadcasts to a scientifically measurable degree. It's a shift that plays a massive role in U.S. culture, resulting in a populace that's less informed and more divided that ever. Oh, and it's potent enough of a force that it can measurably impact elections.

Obviously Pai and Sinclair don't care about this now because it's working in their party's favor politically. But it's still a problem.

Meanwhile, it's hard to over-state just how sleazy you have to be to force this industry-cozy FCC to issue such a fine. And while the fine is the biggest ever levied against a broadcaster by the FCC (which isn't saying much), Sinclair will very likely have the fine reduced or eliminated completely when folks aren't paying attention. The penalty also doesn't come with any kind of meaningful reform. And the decades-old media consolidation rules (long enjoying bipartisan support) the FCC stripped away to help Sinclair (before it went off the rails) remain undone, meaning the core problem -- consolidation and the erosion of quality, local broadcasting and journalism -- is likely to only get worse.

Filed Under: fcc, fines, merger
Companies: sinclair, tribune broadcasting


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  • icon
    Koby (profile), 14 May 2020 @ 1:59pm

    Small Potatoes

    $48m sounds like small potatoes compared to the $3.8b total of the deal. It's just a slap on the wrist. Until there's a real price to pay for attempting to consolidate into a monopoly, the monopolistic behavior will continue.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 May 2020 @ 2:02pm

    Another sinclair fine?

    Keep beating that dead horse if it helps. At least it may deserve it.

    reply to this | link to this | view in chronology ]

  • icon
    Thad (profile), 14 May 2020 @ 2:37pm

    Meanwhile, it's hard to over-state just how sleazy you have to be to force this industry-cozy FCC to issue such a fine.

    It may have less to do with Sinclair's sleazy tactics and more to do with their chief competitor, Rupert Murdoch, who pressured Trump to stop the merger. I wouldn't be at all surprised if he had Pai's ear, too.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 May 2020 @ 9:34am

      Re:

      Hard to say. Janet Jackson's nipple could bring America's broadcast industry to its knees. The FCC has priorities, after all.

      Misleading the Commission is also a big no-no. Anyone remember General Tire and RKO General? I seem to recall that they lost a TV station licence in Boston for denying to the FCC that they were the target of a Securities and Exchange Commission probe some years ago. (They also lost control of CKLW in Windsor for not being Canadian, eh?) At some point, the FCC's ultimate penalties are death, dismemberment or exile to New Jersey... with the latter being a very extreme punishment which is invoked incredibly rarely.

      RKO General owned WOR 9 at the time they lost the Boston licence. That put all of their broadcast licences in jeopardy, but somehow Senator Bradley managed to get an offer made to give RKO one licence renewal they otherwise wouldn't deserve if they moved a commercial VHF TV station to a state which had none. Conveniently, only Joisey and Delaware qualified.

      At that point, RKO's days in the broadcast industry were numbered. The FCC used to be a force to be taken seriously and reckoned with. Before the limp-wristed Trunp administration undermined the laws on community of licence, exile to Secaucus was no joke. Ever.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 May 2020 @ 2:45pm

    I wonder how long before Pai gives the money back? Bet he would, if he could just so he could get his slice of it for 'services rendered'!

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 14 May 2020 @ 3:03pm

    I asked on Twitter, but got no answer...

    How late does your payment to Pai have to be to get this to happen?

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 14 May 2020 @ 4:12pm

    I love the Fines.

    Revenue Increase$2.73 billion USD[1] (2016)
    Operating income Increase$233.4 million USD[1] (2016)
    Net income Increase$245.3 million USD[1] (2016)
    Total assets Increase$5.96 billion USD[1] (2016)
    Total equity Increase$557.9 million USD[1] (2016)
    Owner Smith family (controlling)

    Operating costs about 10% of revenue is CHEAP..
    And we find them how much? $48 million. About 2.5% of revenue?
    If you are a Wage slave making $20,000 per year and get a traffic ticket...you will pay MORE of % then this company did. (PROBABLY)

    I would Love to have an ANON person jump in and show us Some Persons Bank statements..

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 May 2020 @ 9:18am

    Consumer groups accused Sinclair of trying to offload several of its companies to Sinclair-owned shell companies to pretend the deal would remain under the government's ownership cap. The company also tried something similar in trying to offload some stations to friends and other partner companies at highly discounted rates, allowing it to technically not "own" -- but still control -- those stations.

    It's worse than that. Sicklair's modus operandi appears to be to offload stations to non-arms-length entities in places where they'd otherwise be over the ownership cap, then have those entities pay Sinclair to run the stations. There are a couple of forms these deals can take: a "local marketing agreement" where one company owns the station on paper and has another rent all of the air time on it, or a "shared services agreement" where one company owns the station on paper and pays the other to run it. The outcome, either way, is basically the same. A shell company owns stations, pays Sicklair to run those stations, and engages in no other business activity. Bonus points if Sinclair is owned by David Sinclair Smith and Cunningham (as one of the companies paying Sinclair to run stations) is owned by his dead mummy's estate... which is about par for the course for this mess.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 May 2020 @ 3:07pm

    I wonder just how much Sinclair had to illegally bribe Ajit for this?

    gotta be a few million sitting in an offshore account.

    I seriously hope when Ajit goes a step too far, his enemies tear into his bribe-taking ugly grinning ass and he goes to prison for long enough that he won't come out even on parole until he's an old old man.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 May 2020 @ 7:16pm

      Re:

      Doubtful. Pai's got far too many useful toadies to toss under the bus if that happens.

      Ain't that right, Richard Bennett?

      reply to this | link to this | view in chronology ]


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