Groups representing a broad range of industry interests, including Dish, the American Cable Association (ACA), and the Competitive Carriers Association (CCA) have come together to urge the FCC to reject Sinclair Broadcasting’s proposed merger with Tribune Media.
In a Monday press call, ACA CEO Matthew Polka says the proposed deal will stifle local and independent media voices and raise prices for consumers because of higher rates the combined company would be able to demand from distributors.
The group is filling a petition asking the FCC to deny the proposed Sinclair-Tribune merger for two basic reasons Polka asserts: it violates the law, and harms the public.
Sinclair, which is the largest U.S. TV broadcaster, plans to acquire 42 stations from Tribune, adding to the more than 170 stations it already owns. The merger would expand Sinclair’s reach into cities including New York, Chicago, and Los Angeles, and allow the broadcast giant to reach 72 percent of U.S. households. Congress imposed a nationwide audience cap of 39 percent.
“In terms of the legal issues with this merger, Sinclair-Tribune would produce a TV station behemoth that’s unprecedented in both local and national size and power,” Polka notes, adding that the resulting ownership of more than 200 full power stations nationwide with an over 70 percent reach is violation of the statutory national cap rule.
Sinclair would also own two top-four affiliates in 10 of the 14 markets where Sinclair and Tribune operate, violating the FCC’s local television ownership rules which prohibit the ownership of two top-four rated TV stations in a local market, Polka contends.
Sinclair, on the other hand, has said consolidation is essential for the company’s survival, and argued the merger will enable it to expand its stations’ local coverage.
Michael Copps, former FCC commissioner and special adviser to Common Cause, had especially harsh words for Sinclair, saying the company, in his opinion, “is the most dangerous company most Americans have never heard of.”
“Already owning more TV stations than even the big networks, now they want to bust through the audience reach caps set by Congress,” Copps comments on Monday’s call. “They want to do it by skirting a range of ownership caps.”
He also noted the company recently pressed to bring back the UHF discount, which Copps contends “anyone with an ounce of common sense can see has zero relevance in today’s world of high tech television.”
The UHF discount, revived by FCC Chairman Ajit Pai this spring, is a regulatory loophole that will prevent a Sinclair-Tribune merger from far exceeding the federal limits on media ownership. Politico reported that the Tribune deal would not have been possible if Pai had not intervened by bringing it back, as Sinclair already reaches an estimated 38 percent of U.S. households.
The loophole is a holdover from days when the ultra-high-frequency TV spectrum (channels higher than 13) did not have high quality reception. That is no longer is relevant in today’s age of digital television, but under the UHF discount, the FCC doesn’t fully count those stations’ market size when calculating a broadcaster’s national audience.
The conservative-leaning television company would also impact the diversity and voice of local news, potentially forcing over 215 local stations to air editorials composed in its home office near Baltimore, Copps says.
“No one company should have such power over the news and information citizens must have if they’re going to cast intelligent votes and practice successfully, the art of self-government,” he adds.
Polka also states that a combined Sinclair-Tribune would use its market power to extract higher retransmission consent fees from cable operators. He says the “proposed transaction with its unprecedented and colossal scale in increased local presence would be contrary to public interest because it would result in severe harm to competition and to consumers through demands for increased retransmission consent fees.”
Charles Herring, president of One American News Network, says that this merger is somewhat unusual in that there are many sources of independent news from all sides speaking out.
“The real concern here is when you have an entity with excessive, unbalanced power in the marketplace – which Sinclair arguably has now – the market doesn’t work. And we see this currently with Sinclair because they’re able to ask for excessive rates currently fort their broadcast services,” Herring argues on Monday’s press call.
“This raises prices for the consumer, and more importantly it consumes programming budgets, preventing sources of programming from being able to complete deals with the major MVPDs, at least for fees that they need in order to sustain themselves,” he adds.
Herring pointed to the Tennis Channel as an example of how Sinclair currently shuts out independent sources of programming, noting that immediately after the company acquired the channel is “basically forced” it on MVPDs “at a market rate that was much higher than fair market value.” He also contends that as Sinclair gets even larger this trend will continue.
Polka also notes that Sinclair-Tribune would be able to take advantage of so-called after-acquired clauses in Tribune retransmission consent contracts. This could require cable operators to pay higher rates, received by Sinclair, instead of lower rates that may be in Tribune contracts that haven’t expired yet.
“These after-acquired clauses create instant unanticipated rate shock for consumers,” Polka says.
Mobile interests also weighed in, with CCA’s SVP of Legislative Affairs Tim Donovan saying delays from Sinclair-owned stations could “throw the entire repack schedule off the rails, as even non-Sinclair broadcast stations may be delayed due to hold out issues related to other stations.”
He notes that the carriers CCA represents “depend on completing a smooth repacking process as quickly as possible, so that these winners can put the spectrum to use and serve consumers.”
While Sinclair has not said anything specifically about slowing the repack process, Donovan noted that based on the company’s actions to date, Sinclair has advocated “to obstruct the repack process at every procedural step to date, and we expect these efforts to impede a timely process.”
During a question and answer segment during the call, all participants made it clear that the coalition is seeking to deny the merger straight out and don’t see any way that conditions could provide sufficient solutions to their concerns.
“The deal should’ve been dead on arrival,” Copps says.
