Sinclair changes Tribune deal to assuage FCC concerns

FCC Chairman Ajit Pai
FCC Chairman Ajit Pai earlier this week voiced "serious concerns" over certain Sinclair divestitures. (FCC)

Sinclair once again altered its planned station sales as part of its proposed $3.9 billion Tribune acquisition, this time to quell concerns voiced by FCC Chairman Ajit Pai.

Sinclair is switching up the divestiture plans for WGN-TV in Chicago as well as for Tribune stations in Dallas and Houston, all of which had been criticized as “sidecar” deals. The company now plans to put Dallas and Houston stations into a divestiture trust to be operated and sold by an independent trustee, and expects to have a third-party buyer or buyers for the Dallas and Houston stations prior to closing the Tribune deal. Sinclair had previously planned to sell those stations to Cunningham Broadcasting, which is owned by the estate of Sinclair Executive Chairman David Smith’s mother, Carolyn Smith.

Sinclair also now plans to fully acquire WGN-TV, which it says will be permissible under the FCC’s national audience cap. The company had previously planned to sell WGN-TV to a newly formed company headed by Steven Fader, CEO of Atlantic Automotive, a Maryland auto dealership group in which Smith holds a controlling interest.

Sinclair’s revised plans address concerns Pai revealed in a statement earlier this week.

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“Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction. The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law,” Pai said. He said that he was circulating a draft order regarding issues involving certain proposed divestitures for a hearing in front of an administrative law judge.

Sinclair said that, though it had not seen the draft order, Chairman Pai's comments and press reports suggested the FCC is questioning the proposed divestitures in Dallas, Houston and Chicago.

“While the structures put forth to the FCC throughout the process have all been in compliance with law and consistent with structures that Sinclair and many other broadcasters have utilized for many years with the full approval of the FCC, we have consistently modified the structure in order to address any concerns raised by the FCC. As a result and in light of the ongoing and constructive dialogue we had with the FCC during the past year, we were shocked that concerns are now being raised. Nonetheless, we have decided to move forward with these additional changes to satisfy the FCC's concerns,” Sinclair said in a statement.