Sinclair Broadcast Group faces a record $48 million civil penalty to resolve three investigations by the Federal Communications Commission, including one stemming from its failed 2018 merger with Tribune Media, the agency said Wednesday.
The FCC said the civil penalty is the largest involving a broadcaster in the agency’s 86-year history — double the $24 million penalty paid by the Hispanic network Univision Communications in 2007, which was the previous highest fine.
Hunt Valley-based Sinclair Broadcast, one of the nation’s largest TV station owners, agreed to pay the fine and abide by a strict compliance plan, the FCC said.
“Sinclair is pleased with the resolution announced today by the FCC and to be moving forward,” Chris Ripley, Sinclair’s president and CEO, said in a tweet late Wednesday.
One of the FCC investigations stemmed from Sinclair’s failed bid to acquire Tribune Media for $3.9 billion. The FCC raised concerns that Sinclair would still control some of the television stations it planned to divest to win approval of the deal.
“Sinclair’s conduct during its attempt to merge with Tribune was completely unacceptable,” FCC Chairman Ajit Pai said in a statement Wednesday. “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.”
The merger, as originally announced in May 2017, would have given Sinclair control of 233 TV stations, including 42 Tribune-owned stations and a presence in such top markets as New York and Chicago.
The FCC investigated whether Sinclair had misrepresented who would control a group of TV stations Sinclair had proposed spinning off to comply with FCC rules capping station ownership. Sinclair had proposed selling stations in Dallas and Houston to Cunningham Broadcasting Corp., which was owned by the estate of Carolyn C. Smith, the mother of Sinclair’s controlling shareholders, including Sinclair Executive Chairman David D. Smith and his three brothers.
The broadcaster also proposed selling WGN in Chicago to a Towson-based auto dealer, Steven B. Fader, with ties to David Smith.
Sinclair’s agreement with the FCC also closed an investigation into whether the company negotiated retransmission consent agreements with cable providers in good faith. Such agreements allow cable providers to carry a broadcaster’s signal in exchange for a fee.
A third investigation looked at whether Sinclair failed to identify content it produced for both Sinclair and non-Sincliar stations as advertisements, the FCC said.
Ripley thanked the FCC’s staff for its diligence in reaching a conclusion of the investigations.
“Sinclair is committed to continue to interacting constructively with all of its regulators to ensure full compliance with applicable laws, rules and regulations,” Ripley said in the tweet.
Tuna N. Amobi, an industry analyst for CFRA, said it makes sense that Sinclair would want to bring the investigations to a close, despite having to pay such a large fine. Like most businesses, the company is navigating the coronavirus pandemic, which for Sinclair has meant disruption of sports broadcasting for an unknown period and loss of core TV advertising, which the company said Wednesday could be down as much as 39 percent in the current, second quarter.
“It’s a very significant material fine, to be sure,” Amobi said. “If it wasn’t for COVID-19, that is a number that would raise some eyebrows, but the company probably has bigger fish to fry.”
In December 2017, the FCC had voted to fine Sinclair more than $13 million for failing to make the required disclosures for some paid programming, the largest fine it has ever proposed for a violation of sponsorship identification rules.
Earlier reports had said the programming was for Huntsman Cancer Foundation, which raises money for the Huntsman Cancer Institute. Viewers were never told that the programming — which included promotions for the foundation — were paid advertisements.
The programming was broadcast more than 1,700 times, either as stories resembling independently generated news coverage that aired during local news or as longer-form stories aired as 30-minute TV programs without identifying Huntsman as the sponsor. Sinclair admitted in the consent decree that those actions violated sponsorship identification rules, the FCC said.
The Huntsman foundation raises funds to support treatment, education and research being conducted at the cancer institute at the University of Utah.
In a statement, Pai said he disagreed with people 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.”
Pai was likely referring to critics of Sinclair and its growth plans who believe the media company wants to use news broadcasts on its stations to advocate for its conservative views.
Free Press, which describes itself as a group fighting for people’s rights to connect and communicate, said Pai’s comments were meant for the organization, which had opposed the Sinclair merger with Tribune as not in the public interest.
“Sinclair’s long record of lying to and misleading the Federal Communications Commission has caught up with it yet again,” said Craig Aaron, president and co-CEO of Free Press, in a statement.
Aaron said he believed the penalty should have been steeper.
“Let’s not forget that these are the public airwaves, and Sinclair has no special right to broadcast on them,” Aaron said. “Sinclair has abused its control of local-TV stations from coast to coast, inserting right-wing propaganda into local newscasts and turning local journalists into puppets for its political agenda.”
Aaron applauded the FCC’s action, but said its chairman “seems all too eager to turn the page and get back to business as usual.”
