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Sinclair Broadcast will sell TV stations in New York and Chicago to clear path for Tribune Media deal

Sinclair Broadcast Group plans to sell TV stations in New York, Chicago and nine smaller markets as it seeks federal approval of its proposed $3.9 billion takeover of Tribune Media.

The Hunt Valley-based broadcaster outlined steps it will take to comply with national and local TV station ownership rules in a plan filed Wednesday with the Federal Communications Commission.

The Tribune acquisition, announced last May, would cement Sinclair’s spot as the nation’s biggest broadcaster, with control of 233 television stations that reach 72 percent of U.S. households. As originally proposed, the deal would have given Sinclair 42 Tribune-owned stations and a presence in top markets, including New York and Los Angeles.

The FCC said in a Sept. 14 letter that the merger would leave Sinclair exceeding a national TV ownership limit and asked what steps Sinclair planned to take to comply.

“Selling stations in two of the biggest markets will help them reach [below] that ownership cap faster, so it’s not at all surprising,” said Karyl Leggio, a finance professor at Loyola University Maryland. “This is a necessary step in getting closer to FCC approval of the deal.”

Sinclair said it has buyers for WPIX in New York, a CW affiliate, and the independent WGN-TV in Chicago.

The plan also calls for selling at least 13 stations and at most 16, depending on FCC decisions. Those stations will be run by a trust until buyers are found.

The company hopes the trust structure will allow it to keep the acquisition on track and finalize the deal while working out station sales, said Rebecca Hanson, Sinclair’s senior vice president of strategy and policy.

Tribune Media was formed in 2014 when Tribune Co., then the parent of The Baltimore Sun, split its broadcasting and publishing divisions into separate, independent companies. The broadcast division became Tribune Media, while the publishing division, including The Sun, became Tribune Publishing, renamed tronc Inc. in 2016.

In November, the FCC made changes to station ownership rules, including eliminating a requirement that at least eight independently owned television stations remain in a market after combining the ownership of two stations in the market. The agency also allowed ownership of two top-four ranked stations in the same market on a case-by-case basis.

Critics of the deal have accused the FCC and Chairman Ajit Pai, an appointee of President Donald J. Trump, of changing rules to benefit the conservative-leaning Sinclair.

Craig Aaron, president and CEO of Free Press, said he was at first surprised to see Sinclair plan to sell big-market stations in New York and Chicago, but now is concerned that Sinclair will maintain a connection to those stations even after a sale.

"It's not clear to me who the new owner is going to be from the documents filed, but it sure looks like business as usual for Sinclair, which has long specialized in propping up shell companies to evade FCC rules,” Aaron said. “The idea that Armstrong Williams or Cunningham or whoever they are setting up as the ‘owner’ of these stations is independent from Sinclair, at least if the past is any guide, is a complete fiction. Sinclair should not be allowed to set up shady front companies to evade the congressionally mandated ownership caps. But Ajit Pai's FCC is aiding and abetting this ruse in every way."

According to a New York TImes report last week, the FCC’s inspector general is investigating whether Pai improperly pushed through the rule changes in an effort to benefit the Sinclair.

Besides planning to sell stations in New York, Chicago and San Diego to comply with a national ownership cap, Sinclair plans to sell a total of 10 stations in eight markets where it overlaps with Tribune to comply with the FCC’s duopoly rule, including places such as Seattle-Tacoma, St. Louis, Salt Lake City, Oklahoma City and Richmond, Va.

The broadcaster also is seeking permission to own two top-four rated stations in markets in Indiana, North Carolina and Pennsylvania.

lorraine.mirabella@baltsun.com

twitter.com/lmirabella

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