Former FCC Chairman: Sinclair’s divestiture plan “borders on a regulatory fraud”

As we’ve said in previous posts, Sinclair’s new divestiture plan designed to appease regulators into approving its massive acquisition of Tribune media is full of serious problems. Now former FCC Chairman Wheeler is criticizing the plan – and he’s not pulling his punches.

First, Sinclair plans to divest at least four stations to companies with close ties to the Smith family, which owns Sinclair, essentially retaining control of these stations. Second, Sinclair admits it will enter into joint service agreements (JSAs) and shared services agreements (SSAs) with four stations, including WGN in Chicago. JSAs and SSAs are used to skirt FCC ownership rules. Most important, Sinclair’s divestiture of only 23 stations will still leave the merged company with almost 200 stations and far in excess of the 39 percent the congressionally mandated audience reach limit.

Now former FCC Chairman Tom Wheeler is weighing in, saying Sinclair’s use of JSAs and SSAs “borders on a regulatory fraud.”

“This is a technique that was developed by slick lawyers for the purpose of getting around the rules,” Wheeler said in an interview with Politico. “It requires the suspension of regulatory disbelief. … It borders on a regulatory fraud. […]"This is about subverting the rules that have existed forever, and engaging in a charade that somehow Sinclair does not control what happens on these stations.”

The Sinclair-Tribune merger will kill jobs, hurt local news, and raise prices for consumers. Sinclair has submitted five different divestiture plans, demonstrating the complexity of the merger. The FCC should deny the merger, but, at the very least, Congress and the FCC should hold hearings to better understand Sinclair’s divestiture proposal and its impact on media markets across the country.

Links:

Sinclair’s newest divestiture plan is still a scam (Speed Matters, Apr. 25, 2018)

‘It borders on a regulatory fraud’ (Politico, May 30, 2018)