FCC plans vote that could help Sinclair close megadeal

The FCC may soon vote to further relax media ownership rules, says a report. That could help Sinclair Media Group close a $3.9 billion deal to buy Tribune Media.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
3 min read
FCC Chairman Ajit Pai

FCC Chairman Ajit Pai has been faulted for loosening media ownership rules in a way critics say is tailored to benefit Sinclair Media Group.

Win McNamee/Getty Images

FCC Chairman Ajit Pai is expected to take another stab at loosening media ownership rules, a move that could help pave the way for a merger of the Sinclair Media Group and Tribune Media.

Pai is expected to hold a vote July 12 to alter the limits on how many TV stations a company can own, according to a Thursday report from Bloomberg, which cited unnamed sources. Currently, broadcasters are capped at a national audience reach of 39 percent. It's unclear what the suggested new cap would be.

The FCC declined to comment.

This isn't the first move by the Republican-led FCC to relax media ownership rules. In November, the agency voted 3-2 to change the cross-ownership rules, allowing more broadcasters to combine with newspapers in the same market. Broadcasters have long argued the regulations should be eased because they need greater scale to compete with cable and internet companies for advertising dollars.

Pai has been a vocal critic of the current rules, calling them too restrictive. In his remarks during the FCC's November meeting, he pointed out how the media landscape has changed in the past 40 years, with many Americans now getting news from websites and social media.

"The media ownership regulations of 2017 should match the media marketplace of 2017," Pai said.

But Pai's position on the issue and his moves to take action to change the rules have raised eyebrows, since they come as the agency considers whether to allow the $3.9 billion merger of Sinclair Media Group, which owns nearly 200 television stations in the US, and Tribune Media.

Critics ranging from consumer rights groups to Democrats argue that the combined company would have unparalleled control over local TV stations across the country and would be too influential, with many Americans still getting their news from local stations. But Sinclair argues that the deal is critical to ensuring the future of free, over-the-air television and that it better positions the company to compete with online giants such as Facebook and Google for advertising.

Sinclair didn't respond to a request for comment.

There are also reports that Pai, who was elevated to chairman of the FCC by President Donald Trump, has gotten too cozy with Sinclair, which is well-known for its conservative must-run editorials. In February, The New York Times reported that the internal watchdog for the FCC is investigating Pai over claims he may've improperly pushed to loosen media ownership rules in a way that would favor Sinclair.

Pai has denied that he's tried to help Sinclair or any particular company.

The vote planned for next month to allow broadcasters to reach a greater national audience would pre-empt a decision by the US Court of Appeals for the DC Circuit in Washington, which is considering a challenge to part of the existing rules. The case, expected to be decided in late July or August, challenges how the FCC has accounted for a broadcaster's national audience, known as the UHF discount, which lets broadcasters undercount their viewership. The outcome of the lawsuit could push Sinclair over the existing national ownership cap in its deal to buy Tribune.

Under the current accounting, a combined Sinclair and Tribune reaches 38 percent of the national audience. But without using the current methodology, that reach balloons to almost 59 percent of the national audience.

A Democrat-led FCC abandoned the agency's discounted audience accounting in 2016. But Pai reinstated the discount in April of last year. Sinclair announced its deal to buy Tribune the following month.

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