Two FCC commissioners argue the $48 million fine for Sinclair is not enough

Two Democratic commissioners say the punishment for Sinclair's three major violations should include further scrutiny and harsher punishments.

May 22, 2020
Category: Business & Work

Two Federal Communications Commissioners said Sinclair Broadcast Group should not be allowed to walk away from its violation of FCC regulations by just paying a $48 million fine and not admitting that it willfully violated the rules.

The Republican-controlled commission and Sinclair agreed to the record fine in early May, but the consent decree — an agreement to settle the issue without admission of guilt — and dissents from Democrat commissioners Jessica Rosenworcel and Geoffrey Starks emerged in the legal documents filed Friday. The support and dissent break along party lines, which may not be surprising considering Sinclair is widely viewed as being GOP-friendly.

Rosenworcel said she “finds suspect” the FCC’s willingness to let Sinclair clear the deck of further investigations by paying a fine, albeit a big one.

Starks raised the question of why the FCC will not continue its investigation into whether Sinclair should be allowed to own any TV stations. That kind of penalty is the sort of ruling that sends shudders down the spines of broadcast owners that run afoul of the FCC. In a dissent to the consent decree, Starks wrote:

Instead of a transparent vetting by this Commission and the public as to whether Sinclair’s past conduct demonstrates that it has the requisite character qualifications to continue as a broadcast licensee, Sinclair has struck a deal to avoid any further scrutiny. And as part of the deal, the Commission will never be able to consider the underlying conduct at issue ever again. Accordingly, this item creates bad law, bad precedent, and bad policy.

The main issues

Sinclair was hit with the record $48 million fine because of the gravity of the three cases the FCC investigated. The cases involved a merger, Sinclair’s lack of disclosure in helping to run more TV stations than federal regulations allow and an investigation into how Sinclair allowed an advertiser to air programs that looked like news without telling viewers that it was an advertisement.

The first matter involved Sinclair’s effort to acquire Tribune Media, which would have made Sinclair the biggest TV owner in the nation, with 233 stations. But as Rosenworcel said, “During the FCC’s review of this merger, Sinclair Broadcast Group appeared to make a series of material misrepresentations to the agency, namely that it was not the real party-in-interest in entities associated with the transfer of television stations KDAF, KIAH, and WGN TV. Misrepresentations like these would allow the company to evade national limits on television ownership. Accordingly, the FCC sent a letter of inquiry to Sinclair Broadcasting seeking further information about the ownership of these stations and the company’s lack of candor with the agency.”

Because of the FCC’s questions and the threat of a protracted legal battle, the merger fell apart.

But Rosenworcel wrote in her dissent that the FCC should not allow Sinclair to pay its way out of trouble. She wrote, “Doing so is a clear end run around this rule. Why are we violating our own rules to assist this company with the termination of an investigation?”

The second case involved a finding that Sinclair had provided accounting services to TV stations it did not own — and did not report this activity to the FCC. That is a violation of FCC regulations that limit how much reach and influence any single broadcaster can have nationwide.

Again, Rosenworcel was critical of allowing the fine to sweep the violation away. She wrote, “I question how speedily this agency offers the company the benefit of the doubt after 36 prior violations of the law. Moreover, by lumping the penalty for this together with other investigations, it is impossible to know what fine is even associated with this repeated failure to comply with the Communications Act.”

The third case involved allegations of “pay to play” in which 77 Sinclair stations aired sponsored programming a combined total of 1,723 times without telling viewers that the programs, which looked like original station-produced news content, were in fact programming paid for by a hospital group.

Rosenworcel, in her dissent, saved her most critical comments for this case:

 The sheer volume of these pay-for-play violations is unprecedented. It deserves an unprecedented response. But the underlying notice of liability for these violations inexplicably offers the company a significant discount from the total penalty permissible under our rules. Finally, these investigations do not stand alone. Sinclair Broadcast Group has a history of difficulty complying with FCC rules, as demonstrated by multiple forfeiture orders, notices of apparent liability, and admonishment from this agency. I respect the desire of the company to remedy past behavior but find suspect this agency’s willingness to contort the law and its rules to allow them to do so.

Disagreement over how to resolve the cases

Commissioner Starks did not call for Sinclair to lose its ability to own TV stations, which would be a multi-billion dollar ruling that would result in years of litigation. But Starks did say the FCC should at least consider what broadcasters call “the death penalty,” which is the almost unheard-of use of an ownership ban. Starks wrote:

Sunlight is the best disinfectant. The majority’s conclusion that there is no substantial and material question of fact as to whether a character qualifying issue arises from the Sinclair conduct is not warranted, and the decision to allow Sinclair to pay a penalty in lieu of fully accounting for its admitted lack of candor in the Sinclair-Tribune transaction is an abdication of our responsibility to enforce our rules and to require that broadcast licensees act in the public interest, not in furtherance of their own interests. 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. It is clear, however, that this Order ensures we will never know. I dissent.

Republican commissioner Brendan Carr agreed with the settlement and said calls for a deeper investigation and a potentially drastic punishment are based on politics. Sinclair prides itself on giving what it thinks of as alternative views not usually seen in mainstream broadcast programs. Those views include Republican-leaning commentaries that often align with President Donald Trump’s administration. Carr justified his consent for the settlement this way:

To be sure, there are some political actors, including in Congress, that have long and repeatedly called for the FCC to go after Sinclair based on those politicians’ disagreement with the viewpoints expressed in Sinclair’s broadcasts. We don’t do that at the FCC — or at least a majority of us do not do that. We reach our decisions based on the facts and the law. So I appreciate the opportunity to vote on this decision.

Republican commissioner Michael O’Reilly agreed:

It has taken nearly two years to write the final chapter in this proceeding, and some have tried to prolong the saga even further. In addition to the inertia of the already-lengthy process, some D.C. pundits have tried to frame the Commission’s approach towards Sinclair in terms of partisan politics. While I can only speak for myself, I find this accusation to be completely wrong and inappropriate. Our duty as regulators is to treat entities under our purview fairly and impartially, and in cases where our processes have broken down, we owe it to those subject to our jurisdiction to make the needed fixes. It’s time to close the book on this matter and move on.

When he announced the record fine May 6, FCC Chairman Ajit Pai said, “Sinclair’s conduct during its attempt to merge with Tribune was completely unacceptable.”

Pai added to his statement, “Today’s penalty, along with the failure of the Sinclair/Tribune transaction, should serve as a cautionary tale to other licensees seeking Commission approval of a transaction in the future. On the other hand, I disagree with those who, for transparently political reasons, demand that we revoke Sinclair’s licenses. While they don’t like what they perceive to be the broadcaster’s viewpoints, the First Amendment still applies around here.”

When the FCC announced Sinclair’s agreement to pay the fine, Sinclair president and CEO Chris Ripley sounded relieved to be paying a fine and not face a worse outcome. He actually thanked the FCC for agreeing to the fine.

“Sinclair is pleased with the resolution announced today by the FCC and to be moving forward,” Ripley said in a statement. “We thank the FCC staff for their diligence in reaching this resolution. Sinclair is committed to continue to interact constructively with all of its regulators to ensure full compliance with applicable laws, rules, and regulations.”

When the dissenting commissioners suggest a possibility of a license revocation, they are referring to a power that the FCC has to pull the license of any owner who does not live up to the standards the government requires to hold a license. Over the last 75 years, owners have lost licenses for molesting children, airing racist programming, trafficking in drugs and worse. You can see a list, but you get the idea — it is an almost never used but often threatened penalty.

The FCC has shown greater willingness to pull radio station licenses when the case involves shocking content.

President Trump has suggested that the FCC should “pull the licenses” of broadcast stations that air what the president calls “fake news,” but the FCC said it does not have the power to pull a license just because it disagrees with the station’s news content.

Al Tompkins is senior faculty at Poynter. He can be reached at atompkins@poynter.org or on Twitter, @atompkins.

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