November 2, 2017
Group Details Recent Moves and Proposed Rules Changes by FCC Designed to Assist Sinclair-Tribune Merger
WASHINGTON, D.C. – As the Federal Communication Commission’s (FCC) public comment period for the proposed Sinclair-Tribune merger draws to a close, Deepak Gupta, a leading expert in consumer law and constitutional litigation, filed a public comment in opposition to the merger on behalf of consumer watchdog Allied Progress. Additionally, Allied Progress submitted to the FCC, comments from more than 15,000 consumers also opposing the merger.
Allied Progress’s public comment comes as Sinclair’s proposed merger faces increased scrutiny from consumer advocates, lawmakers, and regulators. A final decision on the merger has already been delayed into next year, and recent reports indicate that a review by the Department of Justice could further hamper the merger’s prospects.
“Our comment makes clear that this merger should not and cannot be approved – not without scrapping the entire regulatory framework that applies to station ownership rules and the public-interest standards underlying that framework,” said Karl Frisch, Executive Director of Allied Progress.
He continued, “If approved, the FCC will be creating the largest TV news monopoly in American history, which will lead to newsroom job loses, less competition, fewer voices in the media, and higher costs for consumers. This is a test for the FCC. Will they follow the law and their own rules or will they do favors for the Trump administration’s favorite television conglomerate?”
On a call with shareholders yesterday, Sinclair CEO Chris Ripley made clear that they have no intention of selling off stations to meet FCC requirements, but instead intend to use loopholes like stations swaps and local marketing agreements to skirt ownership caps.
To speak with Deepak Gupta or Allied Progress about today’s filing or the Sinclair merger more broadly, please contact Annette McDermott at email@example.com or 202-697-4804.
KEY EXCERPTS FROM TODAY’S FILING:
From the Executive Summary[The merger] would reduce competition between media corporations in local markets, diminishing the incentive to generate innovative and improved programming for local audiences. And it would undermine local control by enabling broadcast structures that discard programming responsive to local needs and interests in favor of programming created for a national audience. […]
It violates FCC rules governing the transfer of licenses: It would create a nationwide behemoth, violating the FCC’s national ownership cap. And it would significantly reduce viewpoint diversity in local markets, violating the FCC’s local duopoly rule. The merger also fails the public-interest balancing test: it would rob Americans of a real choice between televised sources of news and information, imposing a significant public-interest harm that cannot be outweighed by any public-interest benefit. For these three independent reasons, the merger therefore may not be lawfully approved.
On the Merger Violating the FCC’s National Ownership Cap
To ensure that the American people have access to a diversity of voices on air, Congress has capped the number of viewers that any individual broadcast company can reach nationwide… The proposed Sinclair-Tribune merger would violate this rule. Before the merger was announced, Sinclair already reached 38% of American households. After the merger, the combined company would—on Sinclair’s own calculation—reach a stunning 72% of American households… Even with the reinstated UHF discount, the combined company would have—on Sinclair’s own reckoning—an audience reach of approximately 45.5%, which is 6.5% more than the limit. Without divestitures, then, the merger would still violate the FCC’s national ownership cap. Troublingly, despite the FCC’s request that the parties “[d]escribe in detail . . . what specific steps [Sinclair and Tribune] plan to take to comply with the national ownership limit,” Sinclair declined to identify any specific divestitures…
On the Merger Violating the FCC’s Duopoly Rule
In addition to the national ownership cap, the FCC must ensure that the American people have access to a diversity of voices by prohibiting a broadcasting company from dominating any individual local market. Under FCC rules, no broadcasting company can own more than one of the top four television stations in any local market. Like the national ownership cap, this rule advances the FCC’s core value of promoting viewpoint diversity in local markets. Requiring that each of the top four stations retains an independent owner ensures that each will produce an independent local newscast.
The proposed Sinclair-Tribune merger would violate this rule. Sinclair itself has identified fourteen local markets where the combined company would own two of the Top Four television stations … But even if the required divestitures occur, there is reason to be skeptical that Sinclair is complying with the duopoly rule. Sinclair has historically used “sharing agreements”—agreements that permit it to manage the day-to-day operations of stations it does not technically own—to skirt the requirements of the duopoly rule. …. For these violations of the duopoly rule, the FCC levied a fine of $40,000.
On the Merger Failure to Meet the FCC’s Public Interest Threshold
Even if these specific violations of FCC rules are ignored, however, the merger cannot be said to serve the public interest. To make this determination, the FCC must weigh the potential harm to the public interest against any potential benefits. An evaluation of the harms and benefits should be made with reference to the broad aims of the Communications Act—including enhancing competition in relevant markets and ensuring a diversity of voices is made available to the public. Sinclair and Tribune bear the burden of proving that the merger would serve the public interest. Here, the potential harms from the merger are disqualifying, and the potential benefits are illusory.
First, this merger would be devastating to viewpoint diversity. The Supreme Court has repeatedly emphasized that the FCC’s duty is to promote diversity among voices in the media: “it has long been a basic tenet of national communications policy that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.”[…]
This would further eliminate the number of voices in local media markets… But over and beyond a generalized concern for a diversity of voices, Sinclair’s particular business practices threaten viewpoint diversity… Additionally, unlike many broadcasting companies, Sinclair pushes so-called “must-run” segments onto its local stations, which means that “news directors and station managers from Baltimore to Seattle ha[ve] to find room for [them]” in their daily broadcasts. These must-run segments are uniquely troubling because they are extremely ideologically slanted.
Second, this merger would vitiate local control of television broadcasting. The FCC has always considered localism to be in the public interest because local control ensures that broadcast stations are responsive to the needs and interests of their communities. As the Supreme Court has recognized, “[l]ocal program service is a vital part of community life. A station should be ready, able, and willing to serve the needs of the local community.” This merger threatens those values because Sinclair’s “top-down news philosophy” is inimical to the very concept of local control. As news outlets have reported, Sinclair’s local stations have already complained that Sinclair’s practice of “must-run spot[s] interfere with their jobs as journalists.” Sinclair’s top-down approach of news broadcasting cannot serve the value of local control.
More generally, Sinclair’s requirement that its local stations politicize their news coverage marks a notable departure from how local stations have typically covered the news. Simply put, Sinclair’s politicization of local news is “unheard of.”
The Proposed Repeal of Numerous FCC Regulations Does Not Serve the Public Interest
Rather than hold Sinclair accountable to its regulations, FCC Chairman Ajit Pai is looking to extensively repeal the agency’s decades old broadcasting rules designed to protect localism, competition, and viewpoint diversity. The changes proposed include the elimination of the Newspaper/Broadcast Cross-Ownership Rule, which prohibits a single company from owning both a newspaper and broadcast station in the same market; the elimination of the Radio/Television Cross-Ownership Rule, which prohibits a single company from owning more than two TV stations and one radio station in the same market; and the elimination of the Eight-Voices Test, which requires that there be at least eight independently owned TV stations in a market where a merger of two stations occurs. Pai argues that “the marketplace no longer justifies the[se] rules” when considering competition from Internet companies such as Facebook and Alphabet. His remarks indicate an adoption of Sinclair’s mischaracterization of who their marketplace competitors are: not the local broadcasting entities outlined in federal law, but large media corporations that operate in entirely different sectors.
If Chairman Pai wants to jettison decades of established law, he should take that request to Congress. Unless and until Congress decides to scrap the public-interest framework, the FCC’s job is to enforce it.