FCC Majority Expected to Say Sinclair Acted in Good Faith in Tribune Deal
A voted on yet unreleased order and consent decree resolving investigations into conduct of Sinclair (see 2005060063) doesn’t conclude it was untruthful with the commission and says the TV broadcaster acted in good faith based on the company’s understanding of precedent during negotiations to buy Tribune, industry and FCC officials told us Thursday. The order and consent decree was approved 3-2, with the Democrats opposed, officials said. The decree includes a compliance plan that requires reporting for four years but doesn’t involve spinoffs or other stiffer requirements beyond the $48 million penalty, and prevents further FCC proceedings on the allegations, the officials said.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The pact cites the administrative law judge ruling that stemmed from the dissolved Sinclair/Tribune, which didn’t say the company violated rules against providing false information. Since the ALJ didn’t positively conclude there was a candor violation, the order doesn’t reach that issue, said FCC and industry officials. ALJ Jane Halprin said in her order terminating the hearing process it could be determined that “an examination of the misrepresentation and/or lack of candor allegations” is “warranted.” Those lines are “dicta” and not a binding ruling, said a broadcast attorney. Sinclair didn't comment.
Since the decree doesn’t say a character violation occurred, the agency doesn’t need to hold hearings on the matter when Sinclair seeks to renew its licenses or purchase broadcast stations, industry officials said. Several Sinclair opponents said the character issues require a hearing. "The question is whether this will be deemed relevant to the character standards required for the renewal of licenses,” emailed former FCC Chairman Tom Wheeler. “The FCC should have held a full hearing to examine these allegations rather than issuing a consent decree behind the scenes,” said former Commissioner Mike Copps, now with Common Cause. “Closing the investigation on Sinclair should not close the door on scrutinizing a company whose license renewal applications will soon come up for FCC review.”
It’s not clear the FCC can resolve an outstanding character issue without a hearing, said Benton Institute for Broadband & Society Senior Counselor Andrew Schwartzman. He said future litigation is extremely likely, possibly through the license renewal process. Numerous broadcast attorneys said petitions to deny are likely to be filed against Sinclair’s license renewal process despite the consent decree. The process for the decree has been “highly irregular” Schwartzman said, citing the FCC’s news release before making the decree public. Industry attorneys said petitions to deny the licenses are unlikely to have much impact at the FCC, after Chairman Ajit Pai's statement Wednesday licenses wouldn't be revoked.
The decree resolves an investigation into possible violations of good-faith retransmission negotiation rules. The investigation concerned allegations that Sinclair and its sidecar stations improperly shared information about retrans contracts, said FCC and industry officials. The decree resolves a long-stalled notice of apparent violation concerning years-old sponsorship identification violations connected with content for the Huntsman Cancer Institute (see 1712210042).
“We made no determination of ‘violations’ on the retrans front, but rather we closed that investigation in light of the significant agreed-upon penalty and the compliance plan,” emailed an FCC spokesperson. Sinclair reached a $9.49 million settlement over good-faith negotiation violations with the FCC in 2016, which included a 36-month compliance plan (see 1607290067). An FCC spokesperson confirmed “some of the actions cited in the consent decree took place within the timeline of that compliance plan.” Numerous stations with sidecar relationships to Sinclair were found in violation of the good-faith rules and appealed that ruling (see 2005010058).
Industry lawyers said the new accord resolves outstanding matters that threatened the broadcaster’s renewal process, and made it highly difficult for the company to participate in new transactions. Pursuing a hearing would likely have been a fraught process, they said. “A final finding would destroy their business,” said Holland & Knight's Charles Naftalin: The regulator would have been in “unending litigation” against a company with “unlimited resources, fighting tooth and nail.”