Sinclair Broadcast Group, the largest local television broadcaster in the United States, tried on Wednesday to appease the federal authorities regarding its proposal to buy a competing TV group. But the Federal Communications Commission still unanimously voted for a judge to review aspects of the agreement, a potentially ominous sign of the merger.
The company, known for reinforcing the Trump administration's agenda in comments posted on numerous local news stories, is trying to buy Tribune Media for $ 3.9 billion. The deal would put Sinclair, based in Maryland, in the control of broadcasters that reached seven out of ten households across the country, including New York, Chicago and Los Angeles.
The F.C.C. Chairman Ajit Pai said on Monday that he had "serious concerns" about the planned divestments. Mr Pai asked the four Commissioners of the Agency to refer their merger review to a magistrate to determine the legality of Sinclair's original proposal.
The company said in a statement on Wednesday that it now has two of the stations in question, one in Dallas and one in Houston, through an independent trust after completing business with Tribune. A third station, WGN in Chicago, which owns the Tribune, would be sold directly to Sinclair to make the station more transparent.
But Sinclair's amended plans apparently did not affect the FCC's decision regarding Mr. Pai's order, which the agency will release Thursday.
Sinclairs attempts to create a conservative-tipping news operation to rival Rupert Murdoch's Fox News. If the company manages to buy Tribune, it will control more than 200 stations, reaching 62 percent of households.
Sinclair's divestiture plan was shortlisted as several of his planned stations remained under contract control by Sinclair "Sidecars."
The broadcaster was planning to sell the Chicago train station to a Maryland businessman, Steven Fader, who has connections to Sinclair's CEO, David D. Smith. The company would get $ 60 million in sales, but it would continue to sell advertising and program broadcasters. Sinclair would also collect 30 percent of station revenue in fees for this service.
Sinclair also agreed to sell the Dallas and Houston Stations to Cunningham Broadcasting, a private company controlled by Mr. Smith's family. Three more stations that Sinclair wants to sell include sidecar agreements. The company has not changed its plans to sell these stations.
These contracts effectively provide regulatory protection by providing the F.C.C. "The license for another company or another name, while the seller may continue to operate the business," said Craig Aaron, President of the Consumer Protection Group Free Press.
Sinclair's purchase of Tribune is challenged on other fronts. Government regulations prohibit a company from reaching more than 39 percent of television viewers, but Sinclair is taking advantage of a newly relaxed loophole that will allow the company to go below that cap through the so-called UHF rebate.
The discount allows some TV stations to divert half of their audience in areas where they broadcast on the UHF standard, which emits a weaker signal. For decades, broadcasting companies took advantage of this technology to expand their business and compete with cable channels from the beginning, allowing broadcasters to consolidate.
The F.C.C. The key closed the Obama administration, which argued that the switch to digital television – by the agency in 2009 – made any difference between broadcasting standards and made the UHF name a naming of an outdated technology. Pai reopened it last year as part of a major effort by the new Trump administration to ease regulations. The Chairman has also eased a restriction on television broadcasters who share advertising revenue and other resources.
However, the change of FCC to UHF rebate is contested by the Consumer Advocacy of the United States Court of Appeals for the District of Columbia. You have asked the Agency to suspend the review of the Sinclair Tribune Contract pending a decision on this case.
However, Sinclair could finalize the deal before a court decision and argue that the acquisition should be in the grandfathering scheme. 19659002] If the court works with the FCC, it could open the door to other broadcasting mergers, and the four big broadcasters – CBS, ABC, Fox and NBC – could try to buy more local affiliates, especially in swing states, where political advertising issues during the election years.
Cecilia Kang contributed to the coverage.