FCC Releases Sinclair Consent Decree, Says It Acted in Good Faith

Dissenting Commissioners Jessica Rosenworcel and Geoffrey Starks excoriated the settlement in their remarks. “It is not clear whether a full examination of Sinclair’s actions would result in a revocation of its broadcast licenses, an admonition, or something in between,” wrote Starks. “It is clear, however, that this Order ensures we will never know." The order doesn't include a statement from Chairman Ajit Pai.

Asked about the two-week gap between the agency’s announcement of the settlement and the release of the text, an FCC spokesperson said “it took a significant amount of time for the other Commissioners to provide the Bureau with their statements. You would need to ask them why that was the case, particularly given that the item had been on circulation for over a month when it was adopted.” The commissioners' offices didn't comment.

Sinclair gave the FCC additional “clarifying” information after its transaction with Tribune was designated for hearing about arrangements with divestiture buyers Steven Fader and Cunningham Broadcasting, the decree said. Filings in court and at the FCC from Tribune and other parties alleged Sinclair had extensive financial relationships with those buyers. Sinclair had guaranteed Cunningham’s debt, and Fader was CEO of a company controlled by Sinclair controlling shareholder David Smith. “Following review of this subsequent information, we find that Sinclair structured its transaction based upon a good faith interpretation of the Commission’s rules and precedent,” the decree said.

“Consequently,” the FCC said there’s no “character qualifying issue,” and declined to rule on whether Sinclair violated rules requiring applicants “to ensure the continued accuracy and completeness of information before the Commission in an application proceeding,” the document said.

That’s “an end-run” around FCC rules, said Rosenworcel in her statement. The agency can’t negotiate consent orders on matters that involve an entity's qualifications to hold a license, she said. “Yet here the agency addresses material misrepresentations behind closed doors and then summarily dismisses them in a consent decree.” Allowing Sinclair “to hide behind a claim that its conduct was done in ‘good faith’ belies the fact that Sinclair had motive to omit inconvenient facts while seeking approval for a merger,” said Starks. A broadcast attorney told us that similar matters have been settled by consent decrees in the past.

“Once the issue goes to the ALJ, the commission lacks authority to make findings that were delegated to a judge,” said Benton Institute for Broadband & Society Senior Counselor Andrew Schwartzman, referring to an administrative law judge.

“The Commission did not negotiate over Sinclair's qualifications to hold a license,” said an FCC spokesperson. “It found that Sinclair was qualified to hold a license and then negotiated over resolving investigations into potential rule violations by Sinclair.”

Sinclair doesn’t admit liability for the alleged retransmission consent negotiation violations in the order and consent decree, and the item says they came to light as part of Sinclair’s compliance plan from a previous consent decree on retransmission consent violations. “Through the compliance reporting and follow up by the Media Bureau, Sinclair informed the Media Bureau that it had access to certain retransmission consent agreements executed by certain Non-Sinclair Stations,” the order said. The “Non-Sinclair Stations” are sidecars, or broadcasters for whom Sinclair handles services such as advertising sales but doesn’t own.

The only violations Sinclair admits are years-old sponsorship ID violations, concerning the airing of content from the Huntsman Cancer Institute without proper disclosures. Those violations were previously the subject of a notice of apparent liability proposing a $13 million penalty. The consent decree doesn’t assign dollar values to the other matters, but a broadcast attorney told us the remaining $35 million would be a very large penalty for the retransmission consent issues described in the document, so the penalty appears to encompass all the matters in the consent decree.

It imposes a compliance plan on Sinclair for 48 months but doesn’t require third-party monitors of the company’s behavior, as some previous consent decrees have. The plan involves regular reports to the Media Bureau, creating internal policies and oversight to ensure it's abiding by FCC rules. The plan also requires Sinclair to make sure employees handling retransmission consent deals don’t have access to the retransmission contracts of sidecar companies.

Numerous broadcast attorneys said they expect some sort of legal challenge. That could take the form of a petition for reconsideration against the order, or against Sinclair’s license renewals, which are to begin June 1, they said. The order specifically prevents the FCC from beginning any new proceedings on the matters it concerns or doing so based on any third-party petitions or inquiries.

The Republican commissioners both said in their statements they were pleased to move on from the matter. Commissioner Brendan Carr blasted members of Congress and “political actors” who “long and repeatedly called for the FCC to go after Sinclair based on those politicians’ disagreement with the viewpoints expressed in Sinclair’s broadcasts.”

Commissioner Mike O’Rielly also criticized political attacks on Sinclair, and took aim at the agency’s ALJ process. “No transaction, irrespective of its underlying merits, should be subjected to such a broken process,” he said. “ Agreeing to a record financial settlement and extensive compliance requirements -- far from the slap on the wrist that critics bemoan -- will allow Sinclair to focus on broadcasting and serving the many Americans who rely on its stations.”