Sinclair Merger in Doubt As Judges Raise Issue with FCC Action

The headquarters of the Sinclair Broadcast Group is shown April 3 in Hunt Valley, Maryland
Sinclair Merger in Doubt As Judges Raise Issue with FCC Action

Sinclair Broadcast Group’s planned $3.9 billion takeover of Tribune Media may be in jeopardy after federal officials were grilled in court over rule changes that would let a single company control a vast swath of U.S. broadcasting.

A three-judge panel at the U.S. Court of Appeals for the D.C. Circuit questioned why the Federal Communications Commission relaxed a rule on how many TV stations a network could own – effectively gutting the long-held rule keeping their reach at 39 percent of U.S. households, Bloomberg News reported.

Sinclair, which already is the biggest owner of TV stations in the United States, needs FCC and Justice Department approval for a deal that will give it a massive reach into 72 percent of American homes.

The FCC rule change – reinstituting an old definition that applied to UHF signal reach decades ago – was made just weeks before the Sinclair merger announcement.

The unusual decision and its timing has sparked criticism from both ends of the political spectrum.

Former House Majority Leader Tom DeLay, writing in Politico, said that while he likes Sinclair’s political bent, the FCC and Sinclair were “creating huge political problems for Republicans and President Donald Trump.”

“Opening the door to the Sinclair deal could pave the way for networks such as NBC, CBS, and ABC to consolidate their own empires even further, creating huge liberal broadcasters that dwarf the size and power of the merged Sinclair-Tribune company,” he wrote.

Christopher Ruddy, the CEO of Newsmax and a prominent conservative, also has criticized the FCC rule change, saying it “threatens press freedom and a diverse local press, which has been critical for conservatives who battle against a liberal national media.”

Democrats and public interest groups have argued against the rule change, noting it will give a handful of companies control over most major local TV stations.

They also have blasted Sinclair, the beneficiary of the FCC action, because of its “must run” political commentary and pre-packaged news segments.

After press reports surfaced of hostile questions and comments made by the federal judges, Sinclair’s stock dropped 3.9 percent to $29.40 at the end of regular trading.

One judge on the three-judge panel likened the FCC’s outdated method of counting audience sizes to keeping a moribund body on life support.

Several informed observers suggest the FCC likely will lose the court case, which was brought by policy groups that oppose media consolidation.

They want the FCC to revert to its earlier method of counting audience sizes based on actual household reach.

Sinclair is working with antitrust regulators at the Justice Department who are scrutinizing the deal for its effect on competition.

Sinclair has said it’s willing to sell TV stations to comply with limits on ownership. The proposed deal would include 42 Tribune stations, including outlets in New York and Chicago.

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