The Industry

Sinclair’s Speeding Ticket

The FCC effectively doomed the right-leaning broadcaster’s expansion. But it left the door open for more trouble for local journalism.

The sign outside Sinclair Broadcast Group's offices.
The headquarters of Sinclair Broadcast Group in Hunt Valley, Maryland. Win McNamee/Getty Images

In the months before the 2016 election, the managers of Sinclair Broadcast Group sent a series of mandates from their headquarters in Hunt Valley, Maryland, to their stations around the country—orders to air “must-run” segments with a decidedly anti–Hillary Clinton bent. One from September 2016, the Washington Post reported, directed anchors to ask why the Democratic candidate had struggled “with disclosing her medical diagnosis? … Can a president lead with so many questions of transparency and trust?” Another prompted station anchors to discuss Clinton’s private email server, mandating that the journalists stress how it had been “18 months since the first story broke and she’s still in the mode of damage control.” Other must-runs in September included a package called “Women for Trump,” detailing the work of Lara Trump, the candidate’s daughter-in-law, on his campaign. Suffice it to say, there were no similar segments about Trump’s refusal to disclose his medical or tax records or a feature about how Chelsea Clinton was involved in her mother’s campaign.

With 192 operations under its control, Sinclair is the largest television-station owner in America. When it was reported in April 2017 that the company had engineered a deal to acquire about 40 more television stations from Tribune Media, I admit I was mortified. The pro-Trump tilt that saturates Sinclair stations would spread to more local TV-news operations—the most consumed source of news in the country, according to a Pew study. With 37 percent of adults saying that they use it often to get news, local TV has a viewership that surpasses cable news, newspapers, and social media. With more TV stations, the ideologically motivated Sinclair would be able to exploit the trust of its growing audience while simultaneously diminishing local coverage in favor of national editorial mandates and must-run features. Worse, the company was vying to control more stations in swing states, major markets like Los Angeles and New York, and even multiple stations sometimes in the same city, either through direct ownership or programming and management agreements. And this was happening against a backdrop in which more of the media industry was consolidating, with layoffs—and weakened local coverage—frequently following in the name of trimming costs. That very effect was visible this week when Tronc, the Chicago-based owner of the New York Daily News, announced it was laying off half the paper’s editorial staff.

All summer, it seemed like the Sinclair deal was plowing along—until, as of last week, it wasn’t.

Barring a few tweaks and a handful of station divestitures to satisfy regulators, the merger was slated to go through just in time for the midterm elections, with Sinclair increasing its the number of stations it owns or controls to to about 232 stations, enough to potentially reach 72 percent of U.S. households. But on Monday, the Federal Communications Commission issued a surprising announcement: After months of rolling back media-ownership regulations in ways that appeared custom-tailored to help consummate the Sinclair-Tribune merger, Trump-appointed FCC Chairman Ajit Pai had decided that the details of Sinclair’s proposed divestitures raised “serious concerns”—so serious that he requested the commission vote on sending the merger proposal to the agency’s administrative judge to review the legality of the deal. It did. Now it appears the deal that was supposed to make the largest television owner in the nation even bigger may be on its deathbed. In 2015, when the FCC under President Obama used the same maneuver with the proposed Comcast and Time Warner merger, the companies abandoned their proposal. Tribune is “assessing its options,” while the president appears to be fuming:

Pai’s unforeseen decision to effectively halt the Sinclair merger should come as a moment of relief from a news environment that delivers plenty of woe to journalists these days. The consolidation of media ownership and reckless, profit-enhancing measures by media-owning companies—such as Alden Global Capital, a New York City–based hedge fund that has dramatically cut head counts at the more than 50 newspapers it owns around the country—are among the biggest threats to journalism. And this follows the brutal industry transition of the last decade-plus, in which the arrival of the internet, the disruption of ad-supported media’s business model, and the ravages of the Great Recession gutted newsrooms. The bloodletting has been particularly harsh for print operations, where the sector lost more than 238,000 jobs between 2001 and 2016. Consolidation ran rampant at the same time that largely unregulated internet companies became the main conduits of distribution, driving how consumers find the news. The size and influence of companies like Facebook and Google have been used as an excuse to justify even more consolidation of journalistic outlets, which almost always translates to fewer reporters and less local journalism. That can further erode trust in the media—a particularly worrisome thing at a time when the president uses the press as his main rhetorical punching bag.

For anyone concerned about these trends—not to mention the creep of partisan programming mandates into local news—the likely dashing of the Sinclair deal is great news. But it won’t stop media consolidation, and the current FCC is a large reason why.

Until last week, Pai seemed to be an usher of Sinclair’s expansion, particularly since the man who appointed him is apparently a big fan of the company. On the campaign trail in 2016, Sinclair chairman David Smith told Trump in a meeting, “We are here to deliver your message. Period.” The president praised Sinclair in a tweet in April for being “far superior to CNN and even more Fake NBC, which is a total joke.” That was in response to mounting public ire at Sinclair after it sent dozens of its stations across the country a must-run script declaring that “biased and false news” is extremely dangerous for democracy—a talking point out of the president’s Twitter shtick.

Two Sinclair chiefs, chairman David Smith and CEO Christopher Ripley, met with Pai a day before Trump’s inauguration in 2017, when, according to agency filings, the group discussed the possibility that the FCC would relax restrictions on stations sharing things like studio space and staff and jointly selling advertising between stations. Sinclair has used sharing arrangements in the past to evade local-ownership limits, like by selling a station to a Sinclair-friendly buyer that lets Sinclair continue to run the station. Fifteen days later, after Pai was confirmed as chairman, the FCC rolled back the rules to allow for more such sharing arrangements. Then, in March 2017, Pai moved to reinstate an archaic rule that allowed broadcasters on higher channels to only tally a portion, sometimes even half, of their market size when counting their reach to make up for poor-quality transmissions on those channels. That rule change—which had no basis in technological necessity, since advancements in broadcasting have long evened out the reception discrepancies on higher channels—helped Sinclair to recalculate its reach in such a way that allowed its holdings to fall below national ownership limits so that it could acquire more stations. In May 2017, Sinclair officially announced its plans to acquire Tribune Media for $3.9 billion.

And the deregulation continued throughout last year. The FCC eliminated an 80-year-old rule requiring broadcasters to maintain a studio in or near their community of license. The intent of this rule, of course, was to ensure some level of local accountability and local programming. Now a broadcaster can own a station in Milwaukee and run it from California with no local presence. In November, the FCC moved to loosen the local-ownership limit that prevented a single television-station owner from owning more than one of the top four stations in a single market. One of the main ideas behind such media-consolidation rules is that when one company owns too much media in a single area, it has too much control over what people who live in that area know, which helps determine how people decide to vote or what issues they care about. You might think you’re changing the channel to get a different viewpoint, but if multiple stations are owned by the same company in a single market, that might not be the case. It was that rule change in particular that would, as Democratic Reps. Frank Pallone and Elijah Cummings noted in a letter to the FCC’s inspector general requesting an investigation last November, “clear away virtually all remaining obstacles to Sinclair increasing its reach beyond the Tribune merger proposal.” The agency watchdog agreed to look into the matter, and Pai and his staff are currently being investigated for potentially making its deregulatory moves for the benefit of Sinclair.

Not all of Pai’s proposed rule changes have cleared yet, and Sinclair agreed to divest from 23 stations this April, hoping that it would help its merger pass the scrutiny of the FCC and the Department of Justice. It was widely reported at the time that Sinclair’s divestitures weren’t genuine, and though many would change owners, they would still remain operated by Sinclair; this arrangement is what’s commonly called a sidecar deal. Considering Pai’s zeal for industry-friendly deregulation, and all he’s done to clear the way for Sinclair, his decision last week to send the merger for review—because, as he put it, “the evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law”—felt extremely out of character.

We don’t know what motivated the apparent U-turn. But now that it’s on the record that Pai found Sinclair’s sidecar deals to be in potential violation of the law, any similar deals that help Sinclair or other companies skirt national ownership limits may also become fair game for scrutiny. If the Sinclair merger isn’t approved by Aug. 8, Tribune has the right to pull out of the deal. A resurrection isn’t impossible now, but it won’t be an easy lift.

Yet as the Sinclair drama unfolded, the Justice Department approved Disney’s bid to buy large assets from 21st Century Fox and lost a case challenging AT&T’s acquisition of Time Warner Inc. just weeks ago (though the DOJ plans to appeal). That puts CNN in the hands of the world’s largest telecom company, a move the media and telecom giants justified based on the desire to compete with behemoth internet companies like Google, Facebook, and Amazon. And the deregulatory moves put in place by Pai are already largely on the books, clearing the way for yet more consolidation by other companies as well as more modest moves by Sinclair. Fewer companies are likely to own more and more media outlets.

One result of this is the shrinking of local newsrooms. It’s what often happens when a distant owner buys a local media outlet. It’s what Sinclair, which is based near Baltimore, did last year to KOMO, a TV station it owns in Seattle, when it cut the investigative-reporting team. It’s what Chicago-based Tronc did this week with the New York Daily News, slashing 50 percent of its editorial staff after buying the newspaper last year. A 2014 report by Pew found that 1 in 4 local television broadcasters don’t produce their own local content at all. And sometimes, broadcasters in the same city have even entered into content-sharing agreements, resulting in the sharing of reporters and stories; in 2014, one newscast in Hawaii ran on two different stations simultaneously.

It’s Americans’ trust in local media that Sinclair has exploited for its own political agenda. Unfortunately, the likely end of Sinclair’s bid to buy Tribune Media’s stations may well be an aberration, with other conglomerates continuing to expand (though perhaps without the use of overtly shady tactics like sidecar deals). The deregulation that Pai’s FCC approved in advance of this failed merger leaves plenty of room for the next one.