Sinclair Broadcast Group is offering to change key parts of its takeover plans for Tribune to calm concerns raised Monday by Federal Communications Commission chairman Ajit Pai. The chairman said he was concerned that Sinclair may have attempted to deceive the government by spinning some of the Tribune stations it was buying in Chicago and New York to companies that have close ties to Sinclair's founding family. The FCC said it appears Sinclair was attempting an end-run around the FCC's regulations about limiting station ownership in America.
Sinclair corporate statements have repeatedly stated that the company was surprised by the FCC's new concerns this week. Indeed, Sinclair's plans for how it would sell off some of the Tribune stations have been known for months. As we reported earlier this week, The Wall Street Journal reported in April, "Under the plan submitted to the FCC last month, Sinclair said it would sell WPIX-TV New York to Cunningham Broadcasting Corp. for $15 million and WGN-TV Chicago to Steven Fader for $60 million. Both purchasers have long ties to Sinclair and its executive chairman, David Smith."
As we told you earlier this week, the other parts of the deal have been well-known as well. In March, The Chicago Tribune reported on the connection between Fader and Smith, saying: "The licensee of WGN would be a newly formed company headed by Steven Fader, a longtime business associate of Sinclair Executive Chairman David Smith. Sinclair will have an option to buy back the station for the same price, subject to adjustments, within eight years."
The Tribune said the sale of WPIX in New York City has close ties to Smith. "Sinclair filed a similar application to sell WPIX to Cunningham Broadcasting Corp. for $15 million, with an option to buy it back, and an agreement to provide advertising sales and programming to the station. Cunningham Broadcasting is owned by the estate of Carolyn Smith, the mother of the Sinclair chairman."
Now, Sinclair says, it will change how it divests stations it buys from Tribune in Chicago, Dallas and Houston. A corporate statement Wednesday said:
Sinclair has withdrawn the pending divestitures of stations in Dallas (KDAF) and Houston (KIAH) to Cunningham Broadcasting Corporation and Tribune has withdrawn the pending divestiture of WGN in Chicago to WGN-TV LLC. Sinclair intends to request permission from the FCC to put the Dallas and Houston stations into a divestiture trust to be operated and sold by an independent trustee following the closing of the Tribune acquisition. As a result of the withdrawal of the application relating to WGN, Sinclair will simply acquire that station as part of the Tribune acquisition, which is, and has always been, fully permissible under the national ownership cap.
That means under its new proposal Sinclair would keep WGN, Tribune's flagship local station, and would sell off the Dallas and Houston stations. The FCC limits how much of the national audience any local TV owner can reach and Sinclair says its new proposal would keep Sinclair under the FCC's station ownership limits.
Sinclair owns/operates 173 television stations in 81 markets, with affiliations with all major networks, and says it "is the largest local news provider in the country." Tribune owns/operates 42 television stations in 33 markets, also with affiliations with all major networks. Tribune also owns cable network WGN America, digital multicast network Antenna TV and WGN Radio.
Sinclair's Wednesday statement added a note of urgency for the FCC to get the Tribune takeover back on the rails.
There can be no question that the FCC’s concerns with sales to certain parties have been eliminated in light of the withdrawals of the applications relating to Dallas, Houston and Chicago. Accordingly, we call upon the FCC to approve the modified Tribune acquisition in order to bring closure to this extraordinarily drawn-out process and to provide certainty to the thousands of Tribune employees who are looking for closure.
