FCC

Sinclair Fires Back at Deal Critics

Makes case at FCC for Tribune buy; says opponents trying to stifle competition 8/23/2017 7:27 AM Eastern

Sinclair is vigorously defending its proposed merger with Tribune to the FCC as both in the interest of the public and of the company, which it said needs to scale up to be better able to compete with a growing number of less-regulated competitors.

In fact, it said what deal opponents don't understand is that the deal will help "save" free, over-the-air TV.

That came in a filing in opposition to the petitions to deny the deal, which was due by end of the day Tuesday (Aug. 22).

In the comments, Sinclair alternated between providing data to support its assertion the deal is in the public interest, countering some of the criticisms and dismissing others as not transaction-specific, and not relevant to the merger review.

“Sinclair firmly believes in the mission of local broadcasting and this filing fully explains the public interest benefits that this transaction will provide as a result of the efficiencies and scale created by the combination of Sinclair and Tribune," said Chris Ripley, president and CEO of Sinclair, in a statement. "This acquisition will help to ensure the future of the free and local television model for both Tribune and Sinclair’s local communities.”

Critics had argued that Sinclair's public interest statement filed along with the deal application was thin.

Back in May, Sinclair struck a deal to buy Tribune's 42 stations for $3.9 billion. It will give Sinclair ove 200 stations.

Since then various groups and companies have filed petitions to deny, citing a multitude of issues, from diminished news and less diverse content to the post-incentive auction TV station repack and retransmission consent imbalances of power. Those opponents include Dish, Public Knowledge, Common Cause, One America News Network, and the American Cable Association.

Related: Coalition formed to fight Sinclair-Tribune

Of those opponents, Sinclair said: "At bottom, each of the petitioners is either trying to use this proceeding to stifle competition for its own economic interests or is still living in a pre-cable, pre-internet, pre-smartphone world, untethered from the economic realities of the current media market. Sinclair and Tribune ask the Commission to see these transparent and/or naïve attempts for what they are, dismiss or deny the petitions in full, and grant consent to the proposed transaction."

In a 47-page filing, not including numerous attachments and exhibits, Sinclair said that one of the big public interest benefits of the deal was as a boost to free, over-the-air broadcasting. Scale is essential to the future of the business, mainly to keep up with the consolidation on the distributor side, the broadcaster added.

Related: Sinclair-Tribune Critics Pan Broadcaster's Deal Defense

Sinclair noted that there were no nonbroadcasters stepping up to buy Tribune. No Amazon, no Netflix, which are investing big bucks in programming, but nobody but broadcasters seem to want to invest in broadcasting.

If scale is needed, then consolidation is as well. The money seems to be going into over-the-top, which has no public interest obligations, rather than broadcasting.

Sinclair took aim at the assertion that the deal was a threat to localism. It says the 72% of the nation it will be reaching will not be getting the same content. With the UHF discount, that 72% will be reduced to about 45% coverage, which Sinclair will whittle down to below the 39% national audience cap via spin-offs and waivers, unless the FCC takes action to loosen local ownership rules before the deal vetting is done.

Buying a station in Denver has no bearing on how Sinclair covers news in West Palm Beach, Fla., for example, Sinclair said, because those markets are fundamentally different, and as local broadcasters the company knows that the only way to succeed in a local market is to deliver content relevant to that market.

Sinclair talked about its commitment to local news, highlighting its investment and staffing, as well as the 700 awards it has won over the past three years and ratings increases at WJLA TV Washington and KOMO TV Seattle since Sinclair bought those stations. As examples, the company pointed to the 221.5 hours of local news and other content it has added on its stations in the past three years.

Sinclair said it has invested $40 million in the Fisher and Allbritton stations since those purchases three years ago, $10 million alone on WJLA. Sinclair's goal is to provide a data-rich defense of the deal to counter the suggestion it is not in the public interest and to what Sinclair argues is the mischaracterization of its commitment to localism.

One criticism leveled by multiple parties is that Sinclair is a pro-Trump, conservative voice whose stations line up behind conservative viewpoints.

Sinclair says that any criticism is not relevant to the FCC's review because the First Amendment, Communications Act and FCC precedent gives deference in programming decisions to the licenseholder.

Another criticism is potentially higher retrans fees, but again, Sinclair says that off point since it is a speculative harm. Dish in particular raised the retrans issue, but Sinclair says that their arguments are not relevant because they can't say that it is in the public interest for broadcasters to get less in retrans payments. In addition, it points out that in the Nexstar-Media General merger increased station counts do not create public harm. Essentially, so long as Sinclair is within the ownership rules, which Sinclair has promised, the retrans issue is a fight for another day and another venue.

Sinclair also points out that at the end of the day, the FCC's retrans good faith negotiations requirements remain in place.

T-Mobile raised concerns about Sinclair impeding the post-incentive auction repack since it will be the largest owner of stations relocating, as well as about its role in the ATSC 3.0 advanced transmission standard rollout.

Sinclair said that has absolutely nothing to do with the transaction review, and is again another speculative harm.

As to Newsmax's argument that the deal would reduce the shelf space for its news network, Newsmax TV, Sinclair said that could, too, be dismissed since the company cited no evidence that the deal would result in increased licensing fees of it would harder for them to get on an MVPD platform.

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