The only time I see local news broadcasts is in a momentary flash when flipping upward through the channels in a hotel room. But somebody’s apparently watching them, with annual local TV station advertising revenue averaging around $20 billion (the local stations tend to do a bit better in election and Olympics years).
And doing its best to grab as many of those ad dollars as possible, while simultaneously ensuring your local television isn’t really all that local, is Sinclair Broadcast Group, Inc. Sinclair owns 191 television stations throughout the United States. If you’ve heard of Sinclair at all, it was probably in the John Oliver segment decrying the way Sinclair makes its supposedly local anchors parrot the exact same conservative talking points instead of doing real journalism.
Trying to fly under the radar is kind of Sinclair’s thing. A couple years ago, Sinclair was set to merge with Tribune Media Company in a $3.9 billion deal. Had Sinclair successfully acquired Tribune, Sinclair would have been in 73 percent of American households. What other company that three-quarters of us have never heard of has been set to sneak into three-quarters of our homes?
The deal didn’t go through though, in the face of a wave of bipartisan criticism that it would have given Sinclair a television broadcasting oligopoly. After the launch of an investigation by the FCC’s Office of Inspector General, the FCC unanimously declining to approve the merger. Of this, Sinclair president and CEO Chris Ripley said in a 2018 statement:
We unequivocally stand by our position that we did not mislead the FCC with respect to the transaction or act in any way other than with complete candor and transparency.
Well, fast forward to May 2020, when the FCC announced a $48 million civil penalty against Sinclair related to its attempted acquisition of Tribune. This is the largest civil penalty ever imposed in the 86-year history of the agency (the previous record was only half that, a $24 million penalty paid by Univision in 2007). Compared to Sinclair’s CEO, FCC chairman Ajit Pai had quite a different take on the Sinclair-Tribune deal, saying in a press release:
Sinclair’s conduct during its attempt to merge with Tribune was completely unacceptable.
The $48 million fine is part of a consent decree Sinclair entered into to resolve three separate ongoing FCC investigations. According to the FCC, the investigation into the proposed Sinclair-Tribune deal found that Sinclair attempted to deceive regulators by selling off stations in markets where it would have controlled multiple outlets (which it would have had to do to avoid antitrust issues) to two companies that actually had deep ties to the family behind Sinclair itself. The second FCC investigation found that 64 Sinclair stations aired sponsored content as news more than 1,400 times without disclosing that these were paid-for segments. Sinclair also shared these segments with several non-Sinclair stations, which aired them hundreds more times without telling viewers that they were sponsored content. To put that in English, Sinclair was airing paid advertisements as news. The third investigation closed out by the consent decree was into “whether the company has met its obligations to negotiate retransmission consent agreements in good faith,” and if you can translate what the FCC means by that into plain English, you’re a better wordsmith than I.
So, basically Sinclair was trying to circumvent the rules meant to keep it from owning a majority of local television media outlets and was hiding how it was doing it. Sinclair was also airing paid content as real news, and it was doing something inexplicable but shady when it was negotiating whatever retransmission consent agreements are. Now, Sinclair has to abide by what the FCC calls “a strict compliance plan” and pay a $48 million penalty.
Still, go back to the first paragraph and review the annual revenue up for grabs in local television media markets. Even pre-attempted Tribune acquisition, Sinclair was already involved in something close to 40 percent of local TV markets throughout the U.S. I think they’ll be fine. And I’m willing to bet this is far from the last we’ll hear from Sinclair Broadcast Group, Inc.
Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.