Sinclair station sales needed as Tribune review nears end

WASHINGTON: Sinclair Broadcast Group Inc will likely face demands to sell TV stations in at least 10 cities to satisfy regulators who are wrapping up a review of the company’s plan to buy Tribune Media Co – a US$3.9bil deal that would create a national broadcasting giant.

FCC staff members in a recent discussion focused on completing the review by a self-imposed deadline of Jan 17, according to a person familiar with the deliberations who spoke on condition of anonymity because proceedings aren’t public.

The deal would create a coast-to-coast string of stations exceeding current ownership limits and Sinclair has acknowledged that it might have to sell some of the stations. It would also give a broadcaster known for its conservative leanings fresh reach into leading media markets including New York, Los Angeles and Chicago.

Any sales to secure antitrust clearance from the Justice Department will most likely come in the 10 localities where both Sinclair and Tribune stations are affiliated with major networks, Bloomberg Intelligence analysts Jennifer Rie and Matthew Schettenhelm said in a note.

The Justice Department is working alongsidetheFederalCommunicationsCommission, which has been loosening media-ownership restrictions under chairman Ajit Pai, a Republican chosen by President Donald Trump.

In a Jan 4 meeting with the FCC, Sinclair executives "discussed the general status of Sinclair’s divestiture plan and Sinclair’s communications with the Department of Justice,” according to a Jan 8 filing.

Sinclair in the filing said it may seek FCC permission to leave intact station combinations in the 10 overlap localities, a possibility since the agency in a November vote relaxed restrictions on owning multiple stations in a locality.

In addition to meeting market-by-market local restrictions, the combination faces another limit: a national audience cap.

As proposed, Sinclair would hold stations reaching 45.5% of US households, compared with the FCC’s limit of 39%.

In other mergers that would have exceeded TV ownership limits, companies have offered the FCC a firm plan for divestitures to come into compliance as a prelude to agency action, indicating Sinclair would need to make an offer.

“Sinclair still needs to explain how it will honor the national cap,” Schettenhelm said in an interview Monday.

“It’s never given a clear answer.” Sinclair in an October filing pointed out that it would need to sell stations in at least two markets to meet the national limit, but added “it is premature” to offer specific promises since the Justice Department might demand divestitures, affecting the company’s plans.

An FCC review of the national cap also could change the landscape, the Marylandbased broadcaster said in the filing.

Since then the agency has started its review of the national cap.

It hasn’t set a deadline nor declared whether it will relax the limit.

The deal for Tribune’s 42 stations would boost Sinclair, which already has almost 200 stations, into a leading broadcaster serving more than 70% of US households, including major markets such as New York and Chicago.