WASHINGTON—Even though the proposed Sinclair-Tribune deal was eventually abandoned, the FCC’s Media Bureau has issued a letter of inquiry to David Gibber, senior vice president and general counsel of Sinclair Broadcast Group, explaining that the commission has opened an investigation into Sinclair on whether it misrepresented or provided a lack of candor about who would be controlling a group of stations that would have been spun off as part of the Tribune deal.

The initial deal fell through after the FCC set a hearing on it in front of the commission’s Administrative Law Judge on these accusations of misrepresentation. The hearing was cancelled as a result, but the ALJ Jane Harpin said the allegation warranted a closer look, which the Media Bureau is no supplying.

The investigation will look into “whether, in light of the issues presented in the HDO [Hearing Designation Order], Sinclair Broadcast Group Inc. (Sinclair or Company) was the real party-in-interest to the associated WGN-TV, KDAF and KIAGH applications, and, if so, whether Sinclair engaged in misrepresentation and/or lack of candor in its applications with the Commission,” the LOI reads.

The FCC is now ordering that Sinclair deliver the deal-related documents to the Media Bureau by July 9. The LOI stresses that failure to “respond accurately and completely” can result in a fine or imprisonment.

Other issues raised in the original HDO were dismissed as “moot.”

Speaking on the proposed Sinclair-Tribune deal last year, FCC Chairman Ajit Pai said: “Based on a thorough review of the record, I have serious concerns about the Sinclair-Tribune transaction. The evidence we’ve received suggests that certain stations divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

DALLAS—Nexstar Media Group will acquire Tribune Media, making it the country’s largest owner of local television stations, in a deal valued at $6.4 billion (cash and debt assumption) under the terms of a definitive merger agreement announced today.

Nexstar will pay $46.50 per share of Tribune stock in cash as well as assume the media company’s outstanding debt. The agreed to share price represents a 15.5 percent premium over the closing price of Tribune shares on Nov. 30 and a 45 percent premium since July 16 when FCC Chairman Ajit Pai announced his intention to circulate a Hearing Designation Order regarding Sinclair Broadcast Group’s planned acquisition of Tribune and divestiture of certain stations.

“Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies,” said Perry Sook, Nexstar Chairman, President and CEO. “We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today’s rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate.”

The deal brings together two media organizations with complementary national coverage. If approved by regulators, the combined company will reach about 39 percent of U.S. television households, Nexstar said.

Tribune’s media assets include 42 owned and operated TV stations in major U.S. media markets, a general entertainment cable network, WGN America, and a 31 percent stake in TV Food Network. The combined company will own or service 216 full power TV stations in 118 markets (not accounting for any divestitures) and a significant digital media operation.

In the first year following completion of the merger and divestitures, Nexstar anticipates realizing about $160 million in operating synergies. Bank of America, Merrill Lynch, Credit Suisse and Deutsche Bank have committed financing for the transaction, it added.

According to Sook, Nexstar has developed a comprehensive plan to comply with regulatory requirements and believes it has “a clear path to closing.”

This summer the proposed merger of Sinclair and Tribune hit a serious snag when FCC Chairman Ajit Pai expressed concern about the legality of the transaction. The commission voted to allow an administrative judge to resolve the issue, delaying resolution of the matter indefinitely and prompting Tribune to walk away.

Separately, the FCC’s Office of Inspector General has completed a follow-up investigation of the proposed Sinclair-Tribune merger and again has found no evidence that the FCC Chairman acted improperly.

The investigation stemmed from a request by U.S. Rep. Frank Pallone Jr. (D-N.J.), ranking member of the House Committee on Energy and Commerce, to investigate Pai’s conduct regarding his interactions with the White House as related to the Sinclair-Tribune merger.

“We are pleased that the Office of Inspector General has confirmed for a second time that there were no improper actions taken during the Sinclair-Tribune review process and that the investigation has concluded,” said Brian Hart, director of the FCC’s Office of Media Relations.

BALTIMORE--Sinclair Broadcast Group on Tuesday answered Tribune’s lawsuit over their failed merger with a countersuit.

Sinclair agreed to acquire Tribune for $3.9 billion, but the deal fell through earlier this month after the Dept. of Justice and the FCC expressed objections.

Each company canceled the deal and Tribune sued Sinclair seeking damages of at least $1 billion and claimed that Sinclair did not move appropriately to achieve government consent.

[Read: Tribune Files Lawsuit Against Sinclair, Effectively Ending Merger]

"We were extremely disappointed that the Tribune transaction was terminated," said Chris Ripley, Sinclair's president & chief executive officer.

"We are likewise disappointed that Tribune, through its meritless lawsuit, is seeking to capitalize on an unfavorable and unexpected reaction from the Federal Communications Commission to capture a windfall for Tribune,” Ripley added. “Today, we filed our response to Tribune's complaint, along with a counterclaim against Tribune for breaching the merger agreement. As described in our filing, we fully complied with our obligations under the merger agreement and worked tirelessly to close the transaction. The Company looks forward to vigorously defending against Tribune's claims and pursuing our own claim."

Tribune responded with a statement of its own.

“Sinclair’s counterclaim to Tribune’s complaint is entirely meritless and simply an attempt to distract from its own significant legal exposure resulting from its persistent violations of Tribune’s contractual right,” Tribune said.

“As detailed in Tribune’s complaint, Sinclair repeatedly and willfully breached its contractual obligations during what should have been a straightforward regulatory review process," Tribune added. "Sinclair’s misconduct culminated in its submitting to the Federal Communications Commission divestiture proposals that led the Commission to order a hearing on the fundamental issue of Sinclair’s lack of candor, thus ending any chance at merger approval in any reasonable timeframe. Tribune looks forward to holding Sinclair accountable in court.”

Editor's note: The following editorial was written prior to last week's news of the collapse of the Sinclair Tribune merger. 

Does the television broadcasting industry need further consolidation in order for Next Gen TV to succeed?

That was one of the main arguments put forth by Sinclair in its efforts to acquire Tribune when it announced its deal last year. “The acquisition will enable Sinclair to build ATSC 3.0 advanced services, scale emerging networks and national sales and integrate content verticals,” said Chris Ripley, Sinclair president/CEO at the time.

The $3.9 billion deal would have added 42 stations to Sinclair’s current stable of 193 stations. Even after selling off a number of stations to comply with federal rules, the combined group would control 215 stations reaching 62 percent of U.S. households in 102 television markets.

Last month, FCC Chairman Ajit Pai, who originally supported the proposed deal, did an about face, expressing doubts about the acquisition after reviewing station transactions—in particular, two stations in Texas and WGN-TV in Chicago, characterizing them as “sham” transactions.

Later, the commission released a hearing designation order that provided more details about their concerns, saying it had “significant questions” about the divestitures.

“We are unable to find upon the record before us, that grant of the applications would be consistent with the public interest,” the commission said, adding that the facts in the order “raise questions about whether Sinclair was the real party in interest under Commission rules and precedents and attempted to skirt the commission’s broadcast ownership rules.”

Sinclair denies any wrongdoing and says it has been straightforward with the commission. Nevertheless, the company said it would be “greatly disappointed if the transaction cannot be completed.”

The FCC’s actions has prompted the Department of Justice to examine the process of TV ad sales and whether broadcasters have conspired to artificially inflate ad pricing. Several class action suits have been filed against Sinclair, Tribune and several other station groups.

The furor that has erupted over this issue illustrates the dilemma broadcasters face in today’s media market. Facing increasing pressure from Silicon Valley over digital advertising platforms based on personal data that can target individual consumers down to their shoe sizes, the broadcast industry is responding by touting the advantages of Next Gen TV, which, because of its IP-based two-way data capabilities, will be able to better compete with the Googles and Amazons of the world in targeted advertising.

“The biggest continual decline in our business is ad revenues,” Mark Aitken, vice president of advanced technology for Sinclair told the Wall Street Journal last year, adding that deployment of the new standard could stop and ultimately reverse that “draining process.”

Now that the merger is in serious doubt, do we need to be concerned over how it will affect the transition to ATSC 3.0? The transition to ATSC 1.0 was a government-mandated transition, with built-in incentives to ensure consumers would continue to receive over-the-air broadcasts. The transition to ATSC 3.0 has no such protections—it is a market-driven, voluntary deployment that will also require cooperation among competitors to transition away from 1.0. Sinclair is not the only station group that has promoted the advantages of consolidation in order to finance the deployment and advantages of ATSC 3.0.

But the benefits far outweigh the burdens of deployment, which could cost as little as $100,000 for a small independent station to as much as $1 million for a facility shared by several. It will enable broadcasters to improve their competitiveness in the digital media marketplace and better serve their local communities. And let’s not forget perhaps the most important incentive of all: When it comes to spectrum, the FCC is effectively telling broadcasters: “Use it or lose it.” The commission has made it clear that our industry will need to make optimum use of our remaining spectrum and to that point, ATSC 3.0 is the end game.

Deal or no deal, I believe Sinclair will continue to work towards deploying the standard. I don’t doubt their offer to “put millions of chips into the hands of suitable device manufacturers free of cost,” still stands. The company holds numerous patents on the standard that will still enhance their bottom line if and when widely deployed. And let’s not forget the importance of alliances such as Pearl TV that continue to test and commence building out facilities to launch Next Gen TV.

The business advantages for ATSC 3.0 extend beyond just the consumer market. Sinclair, in particular has touted the standard’s datagathering advantages for business-to-business and related enterprises.

In short, we are just beginning to touch the surface of Next Gen TV’s vast opportunities and its success is not dependent on any one company. The potential collapse of the Sinclair Tribune merger could make it more difficult to reach critical mass, however it won’t stop the train.

NEW YORK—Tribune Media Company today announced that it has terminated its $3.9 billion merger with Sinclair Broadcast Group and that it has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract. The lawsuit seeks $1 billion in compensation for all losses incurred as a result of Sinclair’s material breaches of the merger agreement, including lost premium to Tribune’s stockholders and additional damages in an amount to be proven at trial. .

The merger had already been on life support since last month when FCC Chairman Ajit Pai, who originally supported the proposed deal, did an about face, expressing doubts about the acquisition after reviewing station transactions—in particular, two stations in Texas and WGN-TV in Chicago, characterizing them as “sham” transactions.

Later, the commission announced that it would send the proposed merger to an administrative law judge for review. 

August 8 was the deadline for the merger to be completed and Tribune's announcement comes one day after Sinclair said it was continuing to pursue the merger.

In announcing its lawsuit Tribune claimed that Sinclair “engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the FCC over regulatory requirements, refused to sell stations in the markets as required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay—all in derogation of Sinclair’s contractual obligations.”

Tribune went on to say that “ultimately, the FCC concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC’s ownership rules,” adding “Sinclair’s entire course of conduct has been in blatant violation of the merger agreement and, but for Sinclair’s actions, the transaction could have closed long ago.

“In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,” said Peter Kern, Tribune Media’s Chief Executive Officer. “This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”

Opponents to the deal were quick to declare victory. 

“The collapse of this merger is as major a victory for American consumers as it is a defeat for the propaganda pushers at Sinclair," said Karl Frisch, executive director of Allied Progress. "Dozens of communities will now be sparred from nightly force-feedings of content advancing the fringe political agenda of the media behemoth's owners." 

The $3.9 billion deal would have added 42 stations to Sinclair’s current stable of 193 stations. Even after selling off a number of stations to comply with federal rules, the combined group would control 215 stations reaching 62 percent of U.S. households in 102 television markets. 

This article has been updated.

The U.S. Court of Appeals for the D.C. Circuit has declined to overturn the FCC's restoration of the UHF discount on the grounds that the parties challenging it--Free Press, Prometheus Radio--did not have standing to bring the challenge.

That could be a big boost to broadcast M&A, though it might not be the big boost for the Sinclair-Tribune deal given the FCC's other problems with it.

The UHF discount means that only half of a UHF TV station's audience counts towards the 39% national ownership cap. The discount allowed Sinclair to bid for Tribune stations that otherwise would have pushed it to almost double that 39% cap.

“I’m pleased with the court’s decision to reject this challenge to the reinstatement of the UHF discount pending the completion of our comprehensive review of the national ownership cap," said FCC chair Ajit Pai.

[Read: Report: Pai Preparing July Vote On 39 Percent Cap/UHF Discount Review]

During oral argument last April, the judges clearly had concerns about not having statements from individual members of the associations establishing particular harms related to the Sinclair-Tribune deal, which the petitioners used as an example of the harms of the discount. The court wanted the petitioners to have identified at least one Free Press member or Prometheus member in a Sinclair market that would have been affected by the potential merger.

The three-judge panel of the court said the argument did not even warrant a published opinion, adding that it did not have to reach the merits of the decision because of that lack of standing.

Those merits were whether it was within the FCC's discretion to reinstate the UHF discount pending “a broader review of the [national ownership] cap” itself after the FCC, under previous chair Tom Wheeler, had concluded it had erred in eliminating the UHF discount before that review.

Since there is no published opinion, it is unclear whether the petitioners could have won on the merits, though two of the three judges appeared inclined to agree with them. Most observers of that oral argument had speculated that, if the standing issue did not derail the challenge, it had a good chance of succeeding and the discount repealed and remanded back to the FCC.

But in a two-page document dismissing the petition to overturn the FCC decision, the three-judge panel said: "Membership organizations may assert standing on behalf of their members, but in order to do so they must show that at least one member “would otherwise have standing to sue in [his or her] own right.”

The court said Prometheus and Free Press did not do that, and it did not accept those showings in a supplement filed after oral argument.

Now that the court has ruled, Pai is expected to proceed with an item that combines the discount with re-thinking the 39% national audience reach cap to which the discount is tied, perhaps by raising it to 50%, as some broadcasters have asked for, with a review of that move down the line in case it needs some more raising.

Free Press and Prometheus can appeal the three-judge decision to the full court.

Free Press attorney Andrew Schwartzman had no comment on next steps, saying he was still processing the decision and that it was too early to make that call.

"This should remove the cloud hanging over broadcasters, preventing them from further growth. The next, and most important, step is for the Commission to eliminate the national cap altogether," said Adonis Hoffman, former top FCC staffer and currently head of Business in the Public Interest. "Taken together, these actions will give broadcasters the regulatory foundation yo compete in a rapidly changing media market against the likes of FAANG [Facebook, Amazon, Apple, Netflix and Google]."

Equity Research analyst Marci Ryvicker called it a "nice and unexpected positive for the broadcast space."

FCC chair Ajit Pai said he has issues with the proposed Sinclair-Tribune merger, raising a big cloud over the deal.

“Based on a thorough review of the record, I have serious concerns about the Sinclair-Tribune transaction. The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law," he said in a statement. "When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction. Instead, the law requires the FCC to designate the transaction for a hearing in order to get to the bottom of those disputed issues. For these reasons, I have shared with my colleagues a draft order that would designate issues involving certain proposed divestitures for a hearing in front of an administrative law judge.”

Designating a deal for a hearing has been a death knell in the past, but one former FCC official sees a way for Sinclair to address the FCC issues and perhaps head off the hearing.

[Read: Sinclair Prunes Station Holdings To Prepare For Tribune Acquisition]

Pai has been accused by Democrats of favoring the deal, but that was clearly not his message Monday in a highly unusual move for a Republican deregulatory chairman.

Pai already has the vote of Democrat Jessica Rosenworcel, though it is unclear how the other two Republicans would vote. The FCC needs three votes to designate it for hearing, but also to approve it, so the move is obviously a big blow to Sinclair's chances.

Sinclair has been criticized for sidecar deals with spin-off stations that would allow it to keep its hand in, and for the relationship to some of the potential new station owners with existing Sinclair officials.

"The proposed divestitures, which are necessary to bring the Sinclair-Tribune transaction into compliance with the commission’s rules, are sham transactions that enable Sinclair to retain control over the divested assets, albeit under the guise of control by a third party," deal critic Newsmax said last week in pushing back on the deal. "This is most evident regarding the divestiture to Cunningham Broadcasting Group (“Cunningham”) and WGN-TV LLC, both of which have close connections to the controlling shareholders of Sinclair and both of which are receiving very favorable prices for the assets they hope to acquire."

“Today’s announcement is welcome," she said in a statement. "As I have noted before, too many of this agency’s media policies have been custom built to support the business plans of Sinclair Broadcasting. With this hearing designation order, the agency will finally take a hard look at its proposed merger with Tribune. This is overdue and favoritism like this needs to end."

The move means that almost certainly the current appeals court decision on the FCC's restoration of the UHF discount, an FCC decision that paved the way for the Sinclair deal, will be issued before that hearing. If the decision reverses the FCC's restoration of the discount, the deal is hobbled no matter what the FCC Administrative Law Judge decision is.

[Read: Unions Take Aim At Sinclair-Tribune Merger]

Former FCC official and deal supporter Adonis Hoffman thinks there is still hope.

"This is an invitation to the parties to restructure the divestitures," he said. "If the overall deal is in keeping with the company's long-term interests, which I think it its, they could do that in advance of the hearing, and salvage the deal."

"I applaud Chairman Pai’s decision today to designate the Sinclair-Tribune transaction for further review and hearings," said Newsmax CEO Christopher Ruddy of the chairman's announcement. "Clearly this decision is based on the facts and law--specifically that Sinclair has not complied with requirements set forth by the FCC to promote diversity, localism and competition."

"When Sinclair has been forced to sell stations during previous mergers, it has routinely sold them to family and friends and then signed agreements to control the programming on those stations," said Karl Frisch, executive director of Allied Progress, which opposes thd deal. "The FCC is right to call out this scheme."

“We are pleased that Chairman Pai has circulated an order designating the proposed Sinclair-Tribune merger for a hearing," said Jeff Blum, SVP of public policy and government affairs for Dish. "It is a prudent step to closely scrutinize whether the proposed merger serves the public interest and consumers.”

“The American Cable Association applauds FCC Chairman Pai for seeking the support of the other Commissioners to refer the Sinclair-Tribune transaction and the associated station sales to Fox and others to an Administration Law Judge, an action that’s understood to signal the Commission’s disapproval of the deal," said American Cable Association President Matt Polka. ACA is part of a coalition opposing the deal. "From the beginning, ACA has insisted that the transaction is unlawful and certain to create numerous consumer harms, such as higher retransmission consent fees. It’s well past time for Sinclair to realize that its effort to engage in massive media consolidation has failed and that it should withdraw the transaction without delay so the FCC no longer needs to devote any of its limited resources to a doomed endeavor.”

“We applaud Chairman Pai’s decision to challenge important elements of this transaction," said Phillip Berenbroick, senior policy counsel at Public Knowledge. "The FCC’s merger analysis requires that transactions affirmatively serve the public interest. It was clear at the outset that Sinclair Broadcast Group’s attempt to acquire Tribune Media would harm the public interest and consumers, and decrease diversity and independence in local broadcasting." 

WASHINGTON—The Communications Workers of America, the National Association of Broadcast Employees and Technicians – CWA and The NewsGuild – CWA filed a petition with the FCC June 20 to deny applications from Tribune Media Company and Sinclair Broadcast Group to transfer control of 42 Tribune TV stations and other media holdings to Sinclair.

“…Sinclair and Tribune have failed to demonstrate in their application and in the ensuing months that any purported merger-related benefits exceed the substantial public interest harms,” the CWA petition said. “On the contrary, it remains clear that the Sinclair-Tribune merger does not serve the public interest because it would violate the congressionally mandated 39 percent national audience cap, reduce competition, harm localism, eliminate jobs, and diminish viewpoint diversity.”

Saying the post-merger Sinclair would be the largest broadcaster in the country, the petition asserted that the company would have a footprint reaching 72 percent of U.S. TV households. “Even with Sinclair’s latest divestiture amendments, New Sinclair would own or operate 215 stations in 102 markets, reaching 59 percent of television households and violating the cap by 20 percent,” the petition said.

The petition also objected to Sinclair’s use of joint service agreements and shared service agreements –called “sidecar agreements”—and their application post merger. “If the merger is approved, Sinclair would have a controlled duopoly or sidecar arrangement in 63 television markets, or almost 60 percent of the merged company’s total markets,” it said.

The UHF discount also plays a role in allowing Sinclair to slide beneath the 39 percent national audience cap, the petition said. The technical disparity between UHF and VHF no longer exists, and the recent FCC decision to reinstate the discount is under court review, it said. The petition called on the agency to postpone any ruling on the merger until after the U.S. Court of Appeals for the D.C. Circuit rules on the UHF discount, which is expected in August.

[Read: Report: Pai Preparing July Vote On 39 Percent Cap/UHF Discount Review]

Further, the petition contended that allowing the merger to go forward would reduce viewpoint diversity and localism, “especially for marginalized groups like communities of color and low-income households,” which are heavy consumers of local TV news. In particular, the petition called out Sinclair’s corporate editorial policy requiring its stations to air “must-run” segments. That policy “compounds the serious merger-related harms to localism and viewpoint diversity,” it said.

Allowing the merger to go forward would also result in significant job losses based on Sinclair’s history, the petition said. It pointed to several examples of job lossses, including KOMO in Seattle, WNWO in Toledo, Ohio, WUHF in Rochester, N.Y., WXLV in Greensboro, N.C., and others. “Over the past decade, Sinclair has reduced workers per station by more than 8 percent,” the petition said.

The filing also took issue with Sinclair’s plan to divest of some stations to win approval for the deal. Six of the 23 stations Sinclair has identified for divestiture have close ties to Sinclair, it said. For example, Sinclair proposes to sell KDAF in Dallas and KIAH in Houston to Cunningham Broadcaster, which is owned by investment banker Michael Anderson, who has “close ties to Sinclair’s owners,” the petition said.

WASHINGTON--FCC chairman Ajit Pai is said to be planning a vote at the July 12 meeting on adjusting the 39 percent audience reach cap on a broadcast group's TV station ownership, according to a report in Bloomberg News.

If the FCC votes to retain the UHF discount or alternatively raise the cap, it could allow Sinclair's proposed merger with Tribune to go through even if a court decision ultimately reverses the FCC's UHF discount decision.

The court could rule before July 12 to reverse the FCC and thus invalidate the discount, but if the FCC votes to eliminate the discount but raise the cap to achieve a similar loosening on national station ownership, the deal could still go through, but with Sinclair having to spin off more stations. The FCC could also eliminate the cap altogether, which would mean the deal could proceed as planned, presuming the FCC ultimately approved it.

Pai has said that the UHF discount is arguably an anachronism that could be eliminated, but that that would have to be considered along with the 39 percent cap. He is widely expected to loosen the cap to allow broadcasters to heavy up in the face of competitors--cable and over-the-top and satellite and telco video providers--who have no similar local or national ownership limits.  

[Read: FCC, Broadcasters: UHF Challenge Has No 'Standing' Legs To Stand On]

Critics of that view argue that broadcasting is meant to be a local service and has a special public interest obligation that separates it from other video providers.

There are almost certainly three Republican votes for at least loosening the ownership cap. Some broadcasters have argued for raising the cap to 50 percent or grandfathering current UHF discounts for groups that would otherwise exceed the cap. Others have argued for shifting the discount to VHFs--the UHF cap dates from analog days when those stations were inferior to VHFs', a situation that is reversed in digital.

July 12 is also the deadline for comment on the Sinclair deal and the date on which the FCC is expected to re-start its clock on vetting the deal.

An FCC spokesperson said he could not confirm whether the item was on the July meeting agenda.

The FCC opened a combined cap and discount proceeding after reinstating the UHF discount, arguing the previous FCC should not have eliminated the discount without also considering the cap at the same time, since the two were linked. The FCC was under no obligation to review the cap, but it is part of current chairman Ajit Pai's broader deregulatory review.  

HUNT VALLEY, MD--Sinclair Broadcast Group announced April 24 that it has entered into definitive agreements with six separate parties to sell a total of 23 television stations upon completion of its acquisition of Tribune Media Group.

The divestiture is part of the broadcast group’s strategy to reduce its TV station holdings to obtain government approval for its purchase of Tribune as well as other business purposes, Sinclair said. The sale of the stations, which is expected to be completed by the end of Q2 2018, also is subject to FCC approval and customary closing conditions.

Buyers include Standard Media Group LLC, Meredith Corp., Howard Stirk, Cunningham Broadcasting Corp., WGN-TV LLC and a sixth party to be announced upon the Tribune acquisition, Sinclair said. Following the sale, Sinclair will provide services to WGN-TV LLC pursuant to joint sales and shared services.

[Read: Sinclair Is Divesting WGN, WPIX, But...]

Standard Media, an affiliate of Standard General L.P., separately announced it will pay $441.7 million for nine Sinclair stations and Meredith announced it will pay $65 million for its sole station acquisition from Sinclair. Cunningham and Howard Stirk were not available for comment at the time of this writing.

The stations, by buyer, include:

Cunningham Broadcasting
KDAF (Dallas, CW, DMA-5)

KIAH (Houston, CW, DMA 7)

Meredith
KPLR-TV (St. Louis, CW, DMA 21)

Standard Media
KOKH (Oklahoma City, Fox, DMA-41)

WXMI (Grand Rapids, Mich., Fox, DMA-43)

WPMT (Harrisburg, Pa., Fox, DMA-45)

WXLV (Greensboro, N.C., ABC, DMA-48)

WRLH (Richmond, Va., Fox, DMA-55)

WOLF (Wilkes Barre, Pa., Fox, DMA-57)

WQMY (Wilkes Barre, MNT)

WSWB (Wilkes Barre, CW)

KDSM (Des Moines, Iowa, Fox, DMA-68)

Howard Stirk
KUNS (Seattle, Univision, DMA-12)

KMYU (Salt Lake City, MNT, DMA-30)

KAUT-TV (Oklahoma City, Independent, DMA-41)

TBA
KCPQ (Seattle, Fox, DMA-12)

WSFL-TV (Miami, CW, DMA-16)

KDVR (Denver, Fox, DMA-17)

WJW, (Cleveland, Fox, DMA-19)

KTXL (Sacramento, Fox, DMA-20)

KSWB-TV (San Diego, Fox, DMA- 29)

KSTU (Salt Lake City, Fox, DMA-30)

WGN-TV, LLC
WGN-TV (Chicago, Independent, DMA-3)

“After a very robust divestiture process, with strong interest from many parties, we have achieved healthy multiples on the stations we are divesting,” said Chris Ripley, Sinclair president and CEO.

“While we continue to believe that we had a strong and supportable rationale for not having to divest stations, we are happy to announce this significant step forward in our plan to create a leading broadcast platform with local focus and national reach. The combined company will continue to advance industry technology, including the Next Generation Broadcast Platform, and to benefit from significant revenue and expense synergies,” he said.

WASHINGTON—The FCC has yet to restart its informal shot clock on reviewing the proposed $3.9 billion merger of Sinclair Broadcasting and Tribune Media.

Sinclair submitted its revised deal to the FCC last Friday (Feb. 23), a revision responsive to spin-offs sought by the Justice Department and the FCC's November deregulatory moves, but as of Tuesday (Feb. 27), the FCC had not turned its shot clock (now red and stopped on day 167) to green.

An FCC source speaking on background said staffers were still processing the updated information.

[Sinclair is Divesting WGN, WPIX, But...]

The FCC signaled back when it stopped the clock Jan. 4 that it would not restart "until after the referenced amendments and divestiture applications have been filed and staff has had an opportunity to fully review them."

The clock will probably also not start until the FCC is ready to put the new deal out for public comment and set the deadlines for those comments and reply comments.

That new comment cycle will likely draw more pushback from deal critics trying to get either the FCC or Justice to block the deal, and who want that merger clock to stay on red.

The Coalition to Save Local Media, which comprises a host of deal critics, from the American Cable Association and Dish Network to Common Cause and NABET-CWA, last week said of the new deal: “These filings should prompt even more scrutiny by the FCC, Department of Justice, Congress and other parties on this proposed mega-merger. The FCC shot clock should remain stopped until Sinclair proposes a credible plan for how it plans to comply with the broadcast ownership rules. When this plan is ultimately produced, there should be meaningful time for review and public comment.

[FCC IG Agreed to Investigate Pai Handling of Sinclair-Tribune]

The FCC has twice stopped the clock on the deal, which was filed with the commission last spring.

This story originally appeared on TVT's sister publication B&C.

WASHINGTON—The FCC's Inspector General late last year agreed to open an investigation into FCC chair Ajit Pai's handling of the Sinclair Broadcasting-Tribune Media merger and related media ownership deregulatory decisions.

Ajit Pai

That is according to Rep. Frank Pallone (D-N.J.), ranking member of the House Energy & Commerce Committee, who sought the IG investigation last fall. The IG does not comment on whether or not it is investigating.

Pallone was concerned that Pai had improperly pushed for various deregulatory moves—restoring the UHF discount, loosening local ownership restrictions—to benefit Sinclair, whose Tribune purchase was a big beneficiary. He said the IG is also investigating whether the dereg was "coordinated" with Sinclair.

Pai has said the review has been by the book, and he has long argued for deregulating broadcasting and that the UHF discount should be looked at in tandem with the 39 percent ownership cap, including whether an analog discount should replace it, though he has also suggested the UHF discount was an anachronism. 

“For months I have been trying to get to the bottom of the allegations about chairman Pai’s relationship with Sinclair Broadcasting,” Pallone said in a statement and to The New York Times, which first reported his confirmation of the investigation. “I am particularly concerned about reports that Chairman Pai may have coordinated with Sinclair to time a series of Commission actions to benefit the company. I am grateful to the FCC’s Inspector General that he has decided to take up this important investigation.”

An FCC spokesperson had no comment on on the status of that investigation or what the threshold for investigating a complaint is, though the FCC website outlines the factors the IG considers in agreeing to investigate, but did signal the suggesting of favorable treatment was meritless.

[FCC Pauses Sinclair-Tribune Deal Review] 

“Given that the FCC under Chairman Pai’s leadership recently proposed a $13 million fine against Sinclair, the largest fine in history for a violation of the Commission’s sponsorship identification rules, the accusation that he has shown favoritism toward the company is absurd,” said the spokesperson.

“Moreover, Chairman Pai has for many years called on the FCC to update its media ownership regulations to match the realities of the modern marketplace. The Chairman’s actions on these issues have been consistent with his long-held views. Considering the strong case for modernizing these rules, it's not surprising that those who disagree with him would prefer to do whatever they can to distract from the merits of the reforms that the FCC has adopted.”

Back in November, joined by Overnight and Government Reform Ranking Member Elijah Cummings (D-Md.), Pallone asked FCC inspector general David Hunt to investigate whether Pai had “taken improper actions to benefit Sinclair Broadcast Group.”

At the time, an FCC spokesperson called the request part of an effort by Democrats to target Sinclair over its perceived conservative political views and branded the allegations a baseless attempt to distract from the merits of the deal.

It is something of a chicken and egg issue. Did Pai help Sinclair by deregulating as expected, or did Sinclair anticipate that deregulation and time its Tribune deal to capitalize on it?

Pai's spokesperson said back in November of the request for an investigation: “Unfortunately, this request appears to be part of many Democrats’ attempt to target one particular company because of its perceived political views, an effort that dates all the way back to 2004 when Ranking Member Pallone, Ranking Member Cummings, and other Democrats demanded that the FCC investigate Sinclair based solely on the content of a documentary they didn’t like and that hadn’t even aired. Any claim that chairman Pai is modifying the rules now to benefit one particular company is completely baseless. For many years, chairman Pai has called on the FCC to update its media ownership regulations—one of which dates back to 1975. The Chairman is sticking to his long-held views and given the strong case for modernizing these rules, it's not surprising that those who disagree with him would prefer to do whatever they can to distract from the merits of his proposals.”

Pai has rolled back a number of decisions of his predecessor, Tom Wheeler, that he opposed and criticized at the time they were approved, including 2014 guidance on how the FCC would treat joint sales agreements and sharing arrangements between noncommonly owned stations; restoring the FCC's UHF discount; and two proposals scheduled for a vote this week (Nov. 16)—potentially eliminating or loosening some media ownership limits and allowing for the rollout of ATSC 3.0 transmissions. The FCC also recently eliminated the main studio rule, which required broadcasters to maintain a studio in their community of license.

[Third Circuit Won't Block FCC Broadcast Dereg] 

Pallone and Cummings pointed to the timing of decisions that impact Sinclair deals (such as its purchase of Bonten stations) and proposed deals (the Tribune acquisition) and said they wanted some answers.

Meanwhile, the FCC has stopped the informal shot clock on its vetting of the proposed Sinclair-Tribune merger while it awaits action by the Department of Justice. Sinclair has modified the deal in light of the FCC's deregulatory moves and in an effort to retain more stations. Likely if and when Justice signs off on that, or its modification of Sinclair's modification, it will need to be refiled with the FCC and put out for public comment.

WASHINGTON—Allied Progress, an opponent of the proposed Sinclair-Tribune merger, is taking to the streets to make its case, literally. The organization launched a mobile billboard advertising campaign on Wednesday, Nov. 15, that is designed to remind regulators and legislators in Washington, D.C., about what it perceives as the negatives of the possible merger.

The billboard, pictured to the left, features Boris Epshteyn, who Allied Progress describes as Sinclair’s “chief propagandist,” and says that the merger would mean “less competition; fewer local voices; more biased news coverage; higher costs for consumers.” It also asks people to oppose the merger by visiting StopSinclair.com.

The billboard will travel the streets of D.C. until Tuesday, Nov. 21. It started its run on Nov. 15 around the Capitol in advance of a panel discussion on the merger being hosted by the Capitol Visitor Center. On Nov. 16 it will be at the FCC headquarters during the commission’s open meeting. It is also expected to visit Congressional offices and the Department of Justice’s Antitrust Division.

“This merger would allow the largest owner of local television stations to monopolize the industry,” said Karl Frisch, executive director of Allied Progress. “Giving Sinclair this staggering level of influence would undermine independent media across the country, cheating consumers of independent journalism.”

BALTIMORE—In a recent blog post, Sinclair’s VP of engineering Harvey Arnold said critics of the proposed merger between Sinclair and Tribune are wrong when they suggest the company would use its new size to delay the repack of TV stations. He says that a move like that would be suicidal and “nothing could be further from the truth.”

Read the full story on TVT’s sister publication B&C.

For more information on the repack, visit TV Technology's repack silo.

WASHINGTON—More shots at the proposed Sinclair-Tribune merger has been fired, this time from the public interest group Public Knowledge and ACA. The organizations filed responses to Sinclair and Tribune’s Opposition to the original Petition to Deny, which has asked the FCC to stop the merger of these companies.

“The record is clear,” Yosef Getachew, policy fellow at Public Knowledge, wrote. “The proposed combination of Sinclair Broadcast Group with Tribune Media is not in the public interest. If approved, the merger would result in fewer diverse independent programming options and higher cable prices for consumers. The transaction could also delay mobile broadband deployment in the 600 MHz band, hindering efforts to close the digital divide.”

“ACA urges the Federal Communications Commission to deny the Sinclair-Tribune transaction because it would violate existing FCC rules while at the same time failing to meet the obligation to demonstrate it would serve the public interest,” ACA President and CEO Matthew M. Polka's statement read. “Even if the transaction were not per se unlawful, it would create a broadcasting behemoth with unprecedented control over both the national and local television markets.”

The proposed merger between Sinclair and Tribune’s 42 stations would enable Sinclair to reach 72 percent of U.S. households, according to Public Knowledge; the organization reports that Congress had previously set a nationwide audience cap of 39 percent.

“Sinclair and Tribune have failed to show any positive, transaction-specific public interest benefits from the merger, and fail to address the significant public interest harms,” Getachew writes. “Instead, their filings in the record have only further demonstrated public interest harms that would result from the merger. Thus, the Commission should block the proposed merger.”

Click on the links to read Public Knowledge's and ACA's complete filings. 

BALTIMORE—Critics of the potential Sinclair-Tribune merger have given their thoughts to the FCC through Petitions to Deny filings, and now Sinclair and Tribune have provided their response. In a jointly filed Opposition to Petitions to Deny, the companies attempt to address each of the claims made in the petitions, including those related to retransmission consent negotiations.

Sinclair sought to show in its filing that this new merger will advance the “health and sustainability of free, over-the-air broadcast television and the benefits the medium provides to the viewing public,” reads the Opposition. It also states that due to competition from streaming services, national or near-national MVPDs and consolidate cable programming networks, the proposed merger will “enable the combined company to invest in unique programming that addresses the news, information and public safety needs for local communities.”

In addition, the Opposition makes the case that the previously filed Petition to Deny has two primary flaws, including the reliance on speculative assumptions and exaggerations and that petitioners arguments are inappropriate in such an adjudicatory proceeding.

Chris Ripley, president and CEO of Sinclair, said in a statement on the filing: “This acquisition will help to ensure the future of free and local television model for both Tribune’s and Sinclair’s local communities.”

Additional criticisms levied against the potential merger—from opponents like Dish, Public Knowledge, Common Cause, One America News Network and the American Cable Association—include diminished news and less diverse content, and post-incentive auction TV station repack and retransmission consent imbalances of power. Some have also argued that is a pro-Trump, conservative voice.

The full Opposition to Petition to Deny can be read here.

WASHINGTON—In a conference call on Monday, Aug. 7, ACA President Matt Polka, former FCC Chairman and Common Cause Special Adviser Michael Copps, One America News Network President Charles Herring, Computer & Communications Industry Association President Ed Black and Competitive Carriers Association Senior VP Tim Donovan announced their FCC filings in opposition of the Sinclair-Tribune merger. Initial comments to the FCC were due on Aug. 7.

To read the full story, visit TVT’s sister publication B&C.