Sinclair Doesn't Provide Specific Divestitures to FCC, Not Expected to Hurt Tribune Deal

Sinclair Broadcast and Tribune didn’t give specifics on how they will bring their proposed deal into compliance with FCC ownership rules, in the response this week to an agency request for more information, but industry attorneys told us that they don’t believe that reticence makes an FCC OK of the transaction less likely. Sinclair is negotiating with the DOJ and still deciding its specific course of action, and the FCC is expected to soon make changes to its ownership rules, Sinclair said. “It is premature at this point for Sinclair to know what specific steps will be required to comply” with FCC ownership rules, Sinclair said. “By failing to provide serious answers to the FCC’s straight forward questions, Sinclair-Tribune is refusing to respect the Commission’s role,” said a statement from the Coalition to Save Local Media, a group formed to oppose the Tribune deal.

Though Sinclair didn’t name specific stations in response to the FCC request, industry officials said they don’t think that will hurt the deal’s overall chances of eventual approval. But it's likely that approval won’t be granted until Sinclair does identify specific divestitures, said a broadcast attorney. Sinclair is seen as holding off until after the FCC takes expected action to relax ownership rules, now believed to be coming in November, numerous attorneys said. “Any license divestitures may be impacted by the rulemaking proceeding to evaluate Section 73.3555(e) of the Commission’s Rules that the Commission has indicated it intends to initiate later this year,” Sinclair said.

Sinclair’s citing of the agency’s plan to revamp ownership rules could hurt that effort because it will provide ammunition for opponents of ownership deregulation to request a judicial stay of any such FCC action, a broadcast attorney said. Attorneys familiar with the Sinclair deal said the transaction is constructed to allow it to go forward regardless of whether the FCC relaxes ownership rules. Sinclair didn't comment.

Sinclair also pointed to ongoing talks with the DOJ as another reason it's not ready to announce specific plans to offload stations. “Divestitures that may be required by the DOJ could impact what actions Sinclair might take to comply with the national ownership cap,” Sinclair said. Sinclair “has entered into an agreement with the DOJ pursuant to which Sinclair anticipates that the DOJ will complete its review before year end,” Sinclair said. Broker Moelis has been in contact with potential buyers “consisting of both broadcasters and financial investor/management teams” about possible divestiture deals, Sinclair said.

“Just weeks ago, the top Sinclair executive said that the company did not plan to sell any local stations,” said the Coalition to Save Local Media release. “The merger, as proposed, is illegal, and Sinclair-Tribune offers no specifics on how they will comply with the law.” In other mergers, the FCC “has stopped the informal 180-day transaction clock when it receives incomplete answers to its information requests,” said American Cable Association Senior Vice President Ross Lieberman. ACA is a member of the coalition, which also includes Public Knowledge, CCA and NTCA. “Sinclair is really testing the Commission’s limits by not being fully responsive to the Media Bureau’s simple questions, like how the Sinclair plans to comply with the existing local television ownership rules,” Lieberman said.