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Sinclair sale of stations challenged

Mark Roberts

Mark Roberts

An advocacy group, Frequency Forward, is challenging Sinclair's sale of five Midwestern TV stations to Rincon Broadcasting. The group's petition to deny the sale, filed yesterday, alleges that Sinclair's conduct in station purchases has not complied with the FCC's regulations on multiple station ownership. That conduct, Frequency Forward argues, disqualifies Sinclair to be a licensee of the five stations, and thus can't sell the stations to Rincon:

Sinclair lacks the basic character qualifications to remain a licensee of the Federal Communications Commission. (“FCC or Commission”). Sinclair is in de facto control of Cunningham Broadcasting Corporation (“Cunningham”), Deerfield Media, Inc. (“Deerfield”) and other sidecar television stations. In addition to controlling television stations in violation of the Commission’s multiple ownership rules, Sinclair has made material misrepresentations to conceal the extent of its control over these sidecar stations. (page 2)
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The petition continues:

Sinclair has a history of operating stations it cannot legally own. It controls its various front entities by entering into agreements with individuals who have close business ties to Sinclair or its controlling shareholders. These agreements give Sinclair control over the individual shareholder/managing member, as well as de facto control of the corporate entity and its stations’ licenses. These contractual arrangements give Sinclair, inter alia, the power to control daily operations; make policy decisions; hire, fire and control personnel; pay financial obligations, including operating expenses; and receive the profits from the operations of the stations. Sinclair’s control over these entities is so pervasive that under the rules of the SEC they have been subsumed into Sinclair as VIEs (variable interest entities). There is no aspect of station operations that Sinclair does not control. Should a nominal owner dissent or vary from Sinclair’s wishes, Sinclair has the power to immediately remove him and replace him with a compliant nominal licensee. (pages 12-13)
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Frequency Forward's petition zeroes in on an attempted sale of WGN-TV (Chicago) to Sinclair, which Sinclair later dropped. Frequency Forward asserts that Sinclair thereby avoided an examination of its use of "sidecar" companies where it does not own a station whose daily operations it manages. The advocacy group also alleges that the Media Bureau of the FCC did not act properly in the aftermath of the failed sale:

Rather than be tested in the crucible of a hearing, Sinclair dismissed its assignment applications. On bended knee and with a checkbook in hand, Sinclair went to the Media Bureau seeking to resolve its outstanding character issues. Despite a clear prohibition in the rules against resolving character issues through a consent decree, the Bureau agreed to settle the case in exchange for a payment of 48 million dollars. To add a patina of credibility to the process the Bureau issued a LOI (letter of inquiry). Sinclair’s answers to the Bureau’s questions lacked candor. (page 26)
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The petition makes no specific assertions regarding Rincon Broadcasting, the proposed buyer of the stations.

The stations specifically affected by this petition are KHQA-TV Hannibal, Missouri (Quincy, Illinois market); KTVO Kirksville, Missouri; WICS Springfield, Illinois; WICD Champaign, Illinois (misstated in the petition as "Champlain, Illinois"); and WVTV Milwaukee, Wisconsin. Given that the petition attacks Sinclair's qualifications to be a licensee, other Sinclair stations could be affected as well.

The pleading: Pleadings « License Modernization « FCC

(Edited to indicate WGN-TV is licensed to Chicago.)
 
TheBigA said:
Interesting petition. Not likely to get anywhere given the company is very supportive of the current administration. But nice try.
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Even if there is no action at this time, there is a reckoning coming and this is putting the issue (of intentional circumvention of core Communications law and FCC policies) on the record for reexamination and (potential) action at that future date.
 
TheBigA said:
Interesting petition. Not likely to get anywhere given the company is very supportive of the current administration. But nice try.
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Weiserguy said:
Even if there is no action at this time, there is a reckoning coming and this is putting the issue (of intentional circumvention of core Communications law and FCC policies) on the record for reexamination and (potential) action at that future date.
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Considering that parts of the petition appear to say that the Commission (or at least the Media Bureau) isn't doing its job, my expectation is that this will reach the appellate level. It also feels like the accusations regarding WGN-TV had been stored up for some time, waiting for the right vehicle to bring them forward, but that's just an impression I'm getting.
 
route56 said:
Is it really necessary to make that indication? :D
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The late Rod Gelatt of the University of Missouri, longtime KBIA news director, including in my undergraduate years, would not have had it otherwise!

route56 said:
Also, the incident that the group describes involved all of the Tribune Media stations, not just WGN-TV.
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It was WGN-TV that was specifically cited in the petition.
 
Sinclair filed its opposition to the petition yesterday (4/24)

First, Sinclair attacks the ‘Frequency Forward’ organization as a Astroturfing “front” for Arthur Belendiuk. Mr. Belendiuk, by himself, lacks standing to file a P2D. Sinclair also informally moves the FCC to sanction Mr. Belendiuk

As for the substantive issue regarding Sinclair’s character to remain a FCC licensee, Sinclair notes that the commission has previously elected not to press the issue into a revocation hearing, and there is nothing changed to warrant doing so now (particularly since this about Sinclair pulling out of a market)

It seems to me that the relief that Mr. Belendiuk is seeking would effectively drop a Nuclear bomb over the Broadcast TV landscape. I’m sure the FCC does not want that.
 
UPDATE! (7/1): The FCC denied the petition to Deny and granted the assignment applications, stating that "its allegations concerning Sinclair’s character qualifications have repeatedly been considered and rejected" and citing multiple previous decisions regarding Sinclair.


With regards to sanctions against Frequency Forward's attorney, the FCC stated: "While we decline to impose any sanctions at this time, as requested by Sinclair, we remind all parties before the Commission that its process and procedures should not be abused for any purpose."

The decision also looked at, and granted, top 4 waivers (KHQA and KTVO have dual ABC/CBS affiliations, and there's no other viable stations in-market that could accept one of the affiliations), and a waiver for WICD to remain a full-power satellite of WICS.
 
route56 said:
UPDATE! (7/1): The FCC denied the petition to Deny and granted the assignment applications, stating that "its allegations concerning Sinclair’s character qualifications have repeatedly been considered and rejected" and citing multiple previous decisions regarding Sinclair.


With regards to sanctions against Frequency Forward's attorney, the FCC stated: "While we decline to impose any sanctions at this time, as requested by Sinclair, we remind all parties before the Commission that its process and procedures should not be abused for any purpose."

The decision also looked at, and granted, top 4 waivers (KHQA and KTVO have dual ABC/CBS affiliations, and there's no other viable stations in-market that could accept one of the affiliations), and a waiver for WICD to remain a full-power satellite of WICS.
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There's also a minor error in the Commission's analysis. It refers to an Iowa PBS translator in Kirksville, Missouri. There's no such thing. I believe the translator in question is actually licensed to Ottumwa, Iowa (K18GU).

Sinclair also made a big deal of KYOU's transmitter site being outside the DMA counties for the Kirksville-Ottumwa market. That's true, but it's very close to two of those counties.
 
umfan said:
I think the Commission should've assessed sanctions.
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If you read the entire document that was linked, you can see that there was a significant question about Frequency Forward's standing to file. Once you get the Commission upset about that (reference the caution at the end of the decision admonishing them and their attorney to avoid "abuse of the process") it's an uphill battle to prove anything that leads to sanctions.

Put in poker terms, FF overplayed their hand and that led to Sinclair winning the pot. (One could say FF shouldn't have been at the table in the first place.)
 
K.M. Richards said:
If you read the entire document that was linked, you can see that there was a significant question about Frequency Forward's standing to file. Once you get the Commission upset about that (reference the caution at the end of the decision admonishing them and their attorney to avoid "abuse of the process") it's an uphill battle to prove anything that leads to sanctions.
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The formal standing was limited to the Milwaukee market, but the document states that the Commission considered the objections regarding the other markets, too, just treating them as an informal objection, which indicates that the assertions of Frequency Forward were given less weight with respect to the other three markets.

K.M. Richards said:
(One could say FF shouldn't have been at the table in the first place.)
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It didn't seem to be the most credible effort.

Knowing the area as well as I do, I find the thought of someone from a liberal advocacy group trying to recruit objectors to Sinclair in the Kirksville-Ottumwa and Hannibal-Quincy markets to be quite amusing.
 
The real problem comes when organizations such as Frequency Forward try to challenge Sinclair's corporate policies and political leanings within the context required for a petition to deny at the station level. You end up with a lot of specious arguments, and then if the Media Bureau denies your standing -- even if only in part -- you've already lost any credibility that would make those weak arguments stick.
 
K.M. Richards said:
The real problem comes when organizations such as Frequency Forward try to challenge Sinclair's corporate policies and political leanings within the context required for a petition to deny at the station level. You end up with a lot of specious arguments, and then if the Media Bureau denies your standing -- even if only in part -- you've already lost any credibility that would make those weak arguments stick.
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FF didn't have a leg to stand on. It had no stake in this transaction. It just wanted to complicate things for Sinclair.

I'm not a fan of Sinclair or it's politics either. But you need something more than "I don't like them" to convince a judge of any wrongdoing.
 
UPDATE 2! (7/31) An Application for Review has been filed. Frequency Forward argues that the 'previously considered and rejected' character allegations were handled via an improper consent decree and that a character hearing regarding Sinclair is required.

Pleadings « License Modernization « FCC

FCC License Modernization
enterpriseefiling.fcc.gov enterpriseefiling.fcc.gov

Bongwater said:
I'm not a fan of Sinclair or it's politics either. But you need something more than "I don't like them" to convince a judge of any wrongdoing.
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AIUI, the Character challenge is that Sinclair has evaded ownership caps via the sidecar entities and should be considered a habitual liar because of it. The presumptive end goal would be the revocation of all of Sinclair's licenses.
 


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