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Scale, Not Content or Politics, at Issue in Sinclair/Tribune, Say Critics of Buy

Sinclair’s proposed buy of Tribune Media would put too many U.S. homes within reach of not enough voices, media consolidation opponents, union officials, academics and MVPD officials told us. After the $3.9 billion deal, the resulting company would reach 69.4 percent of U.S. homes. “I’m not sure it’s a great thing for the American consumer,” said DePauw University media professor Jeffrey McCall. Though some broadcast-side proponents of the deal said it’s necessary for Sinclair to grow to compete in the modern media market, analysts and broadcast officials said the transaction is intended to increase Sinclair’s reach and enhance the viability of the new ATSC 3.0 broadcast standard.

This merger won’t reduce broadcast voices,” emailed Sinclair Senior Vice President-Legal Affairs Rebecca Hanson. “With cable, satellite, wireless and internet content, there are thousands of voices in the marketplace of ideas. Our local voices are as diverse as our local audiences. We have invested almost $40 million in our most recently acquired stations, and nearly half of them have increased news and other local programming,” she said. "We compete fiercely for viewers at the local level, and that requires high quality programming. Most of our news stations have a #1 or #2 rated newscast in their market, which proves we are serving the unique needs of our various communities.”

Consolidation opponents opposing Sinclair/Tribune concede the Ajit Pai-led FCC is likely to approve the deal. The only question is the administrative stay of FCC restoration of the UHF discount ordered by the U.S. Court of Appeals for the D.C. Circuit. Though the discount’s restoration has been stayed only temporarily, the court is expected to issue a decision soon on an emergency stay. If that emergency stay is granted, it would be seen as an indication the court could rule against the restored discount, likely threatening Sinclair/Tribune, attorneys says. That outcome is seen as unlikely (see 1705300070).

Without the discount, the FCC would need to change the national ownership cap to allow the deal to go through as planned, said Wells Fargo analyst Marci Ryvicker. Of current FCC commissioners, only Pai has said the FCC has the authority to raise the cap. Without the discount or a change in the cap, the deal would likely not proceed, Ryvicker said. The delay that would be caused by a stay likely would put pressure on Sinclair and Tribune’s stock prices but wouldn’t cause them to walk away from the deal, she said.

Critics dispute Sinclair/Tribune is necessary. But a broadcast official said the industry move to the new ATSC 3.0 standard is another reason the transaction is needed. Sinclair wants “spectrum real estate,” Ryvicker said. Buying Tribune would give Sinclair a national footprint and allow the consortium it recently entered into with Univision and Nexstar to reach 90 percent of U.S. homes (see 1706070063). That sort of reach is critical for broadcaster plans to use ATSC 3.0 to generate revenue by providing spectrum capacity, Sinclair said (see 1703150067).

Sinclair is seen as politically right-leaning and is known for requiring its stations to air “must-run” political commentary. Opponents of the agreement all told us Sinclair’s content wasn’t a factor in their concern. The scale of the new company is the issue, not the broadcaster’s “political leanings,” said Campaign Legal Center Strategic Adviser Meredith McGehee. “We want a populace that can get their information from a variety of sources,” she said. “If one entity owns all the stations, that is too much concentration,” she said. “This decision should be content-neutral,” said McCall. Though Sinclair might dictate some content to its stations, it’s in the company’s interest to let individual stations remain focused on local news, McCall said. The new, larger Sinclair would likely be less sensitive to the needs of individual consumers, something inevitable when a company gets larger, he said: “When you get bigger, your individual properties” diminish in importance.

Media consolidation is one of the reasons behind increasing politicization of the news and the declining credibility of journalism, said International Association of Theater and Stage Employees 600 Union Representative David Twedell. IATSE represents workers in some Sinclair and Tribune stations. As more stations are controlled by a small number of broadcasters, they're more able to use the stations as an outlet for their personal politics, he said. The public interest aspect of broadcasting has become “quite diluted,” Twedell said. The FCC should more strictly oversee that part of its purview, he said. IATSE and SAG-AFTRA are planning a series of town halls on the effect of media consolidation and politicization on journalism credibility, he said.

Media mergers in general often lead to workforce cuts and fewer people covering the news, said Communications Workers of America Telecommunications Policy Director Debbie Goldman. CWA hasn’t taken a stance on Sinclair/Tribune. The union opposes restoration of the UHF discount, she said.

The transaction also could have ramifications for the MVPDs Sinclair deals with pay TV, officials said. Small cable operators are concerned the deal will drive up retrans fees, “particularly in the nine markets where Sinclair will own multiple top-four rated stations, and because of the triggering of after-acquired station clauses that are part of these operators existing deals with Sinclair,” said American Cable Association Senior Vice President Ross Lieberman. Pay-TV officials also believe the deal is likely to be approved (see 1705120037).