Sinclair Is Forced to Pay $48 Million Fine to the FCC, Largest Civil Penalty in Agency's History

Sinclair Broadcast Group has agreed to pay a $48 million fine to the Federal Communications Commission to close investigations related to its attempted $3.9 billion acquisition of Tribune Media Company. The FCC said in its announcement that this is the largest civil penalty paid by a broadcaster in the agency’s history, twice as big as the previous record ($24 million) set by Univision in 2007. It added that Sinclair will also have to “abide by a strict compliance plan in order to close three open investigations.” In yesterday's announcement, FCC chairman Ajit Pai said its agreement with Sinclair was related to investigations into the company’s disclosure of information related to the acquisition of Tribune-owned stations, its failure to identify sponsored content it produced for broadcast and “whether the company has met its obligations to negotiate retransmission consent agreements in good faith.” The agency's statement, however, did not detail what Sinclair practices were deemed unacceptable. The settlement also closes an investigation into Sinclair’s failure to identify paid programming as advertising, for which the agency had previously proposed fining Sinclair $13 million. In addition, it ends a probe of Sinclair’s negotiations with cable and satellite TV companies. Pai also said he disagreed with those who called for revoking Sinclair's licenses. He described those demands as politically motivated. "While they don't like what they perceive to be the broadcaster's viewpoints, the First Amendment still applies around here," Pai said. After 15 months of back-and-forth, the Sinclair-Tribune deal appeared as though it would finally be realized in August 2018. However, in July 2018, Pai expressed "serious concerns" specifically about stations Sinclair would obtain through the merger in Chicago, Dallas and Houston. Pai noted that the potential buyers had close ties to Sinclair chairman David Smith. Sinclair also needed to divest additional stations in order to meet the national cap on audience reach for any single broadcaster, which is 39% of all U.S. TV homes. Pai suggested Sinclair would sell but still operate those stations, which is illegal. The FCC then sent the deal for review by an administrative law judge. Sinclair was proposing to control 233 stations in 108 markets, adding 42 Tribune stations to its current roster. If approved, Sinclair would have been the largest U.S. broadcast company, a title that now belongs to the Texas-based Nexstar Media Group, which successfully purchased Tribune with approval from the FCC in September 2019. Tribune officially withdrew from the merger in August 2018, and sued the company "in breach of contract." “In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable time frame, if ever,” Peter Kern, Tribune’s chief executive officer, said in a August 2018 statement. In a statement, Sinclair Broadcast Group president and CEO Chris Ripley said that the company is “pleased with the resolution announced today by the FCC and to be moving forward. We thank the FCC staff for their diligence in reaching this resolution. Sinclair is committed to continue to interact constructively with all of its regulators to ensure full compliance with applicable laws, rules and regulations.”

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Sinclair Is Forced to Pay $48 Million Fine to the FCC, Largest Civil Penalty in Agency's History

A.J. Katz

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A.J. Katz