Sinclair Tribune Merger Hits A Rock … And Drowns

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Update: And it’s official. Sinclair Tribune merger collapses with Tribune Media filing a lawsuit against Sinclair Broadcasting requesting compensation for Sinclair blowing the merger.

The very entertaining complaint can be read below. 

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Update: DC’s Third Circuit Court failed to issue a ruling on the UHF Discount lawsuit Free Press vs FCC, handing a victory to the FCC in their standing challenge to public interest groups and leaving in place an outdated rule. However, the primary beneficiary of the rule change, Sinclair Broadcasting, saw their proposed merger with Tribune, hit the rocks.

Update: On July 18, the Federal Communications Commission issued an order (later voted up unanimously by all 5 commissioners) referring the proposed merger to an administrative review, a process generally described as a likely death knell for a merger. 

The FCC’s order was previewed by the unlikely presence of FCC chair Ajit Pai, whose actions to clear the way for the Sinclair-Tribune merger had, to date, been so visually blatant that an internal investigation at the FCC was opened to investigate whether the agency was literally changing long-term ownership rules to accomodate the interests of a single company.

The FCC’s concerns, as expressed in the order (see below) involved the company’s divestitures of broadcasting assets the merged company could not own under the remaining ownership rules. Sinclair’s divestitures to close associates were deemed to be a violation of at least the spirit of the law and the company to have lacked candor in their interactions with regulators.

A likely finding for the plaintiffs in Free Press vs FCC, a public interest lawsuit objecting to the FCC’s sudden restoration of the UHF discount (Media Alliance is a plaintiff in the case) would have increased the amount of divestitures required to complete the merger.

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On April 20, the 3rd Circuit Court of Appeals heard FCC vs. Free Press, the lawsuit questioning the reinstatement of the UHF discount. The lawsuit was filed by several public interest groups, including Media Alliance, and the public interest litigants are represented by the Institute for Public Representation at Georgetown University.

Here is the hearing audio.

The first part of the hearing focuses on the standing issue and some Media Alliance members will be helping us address that. The second addresses the FCC’s sudden reinstatement of the discount.

Much thanks to the MA supporters in Redding, Sacramento, Davis and Fresno who helped us make a persuasive standing case on very short notice.  And media advocates throughout the rest of the country who filed declarations in other states.  And our wonderful lawyers at the Institute for Public Representation at Georgetown University.

Here’s the standing brief that was filed with all of your help, at the bottom of the page.

The UHF discount is an obscure regulation from the old days of analog television when broadcast outlets on the weaker band were given a waiver on their ownership stats due to the relative weakness of their signal. It has little meaning after the digital television transition, but lo and behold it was suddenly brought back from the dead by Ajit Pai’s FCC when the different standard was helpful to Sinclair Broadcasting in staying below the ownership caps in the post-merger company.

Bloomberg coverage of the hearing

Variety coverage of the hearing

Broadcasting and Cable reported that FCC Chair Ajit Pai would not commit to pausing the Sinclair-Tribune merger should the court rule against the FCC.

Broadcasting and Cable coverage

The Sinclair Tribune merger hit the front pages after Deadspin made a viral video of Sinclair anchors across the country reading the same prepared statement.

17-1129 Petitioners' Supplemental Brief Stamped Copy As Filed 9 May 2018)

 

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