PITTSBURGH, August 30, 2017 – The proposed merger between Sinclair Broadcasting and Tribune Media should be denied because the combination would run afoul of major broadcast ownership rules and fail to serve the public interest even if compliance with these rules were not at issue, according to a new filing submitted by the American Cable Association.
“ACA urges the Federal Communications Commission to deny the Sinclair-Tribune transaction because it would violate existing FCC rules while at the same timing failing to meet the obligation to demonstrate it would serve the public interest. Even if the transaction were not per se unlawful, it would create a broadcasting behemoth with unprecedented control over both the national and local television markets,” ACA President and CEO Matthew M. Polka said.
ACA set forth its views in Aug. 29 reply comments (attached) in connection with the FCC’s review of the $3.9 billion Sinclair-Tribune deal announced in May. The proposed transaction would result in the ownership of more 200 full power stations nationwide, reaching 72% of the national audience or 45.5% when applying the FCC’s technically flawed UHF discount. The FCC’s national audience reach cap is set by statute at 39%.
The transaction would also mean the ownership of two, Top 4 affiliates in ten local TV markets, in violation of the FCC’s Local Television Ownership Rule, which prohibits the ownership of two Top 4-rated TV stations in a local market.
In its initial comments, ACA said its opposition to the Sinclair-Tribune merger was based not only on the deal’s clash with existing FCC rules and Sinclair’s failure to meet the FCC’s obligation to demonstrate its deal serves the public interest, but also its harmful impact on consumers and competition in a top-heavy TV station market characterized by rapid consolidation.
For example, ACA underscored that Sinclair-Tribune would be able to further increase already surging retransmission consent fees by using its increased local power to extract supra-competitive fees. Retransmission consent payments would also rise because the completion of the Sinclair-Tribune merger would trigger after-acquired clauses in multichannel video programming distributor (MVPD) retrans agreements that generally mean paying higher Sinclair rates.
What’s more, the massive new entity would also use its leverage to force carriage of programming that MVPD consumers do not want, resulting in higher prices and fewer choices for consumers.
In ACA’s reply comments, ACA noted Sinclair-Tribune’s response to ACA’s concerns offered no better reason to approve the deal or explanation why the consumer harms would not materialize as predicted and, in fact, it only further demonstrated the fallacy of Sinclair-Tribune’s arguments that are central to its advocacy.
Among other things, Sinclair-Tribune:
• Offered virtually no explanation and no relevant evidence in support of the merger. They also mischaracterized the burden of proof in this matter – suggesting that it falls on the opponents when, of course, it falls on the applicants;
• Rested their case on arguments that cannot be justified on the merits with any amount of evidence. Their purported public interest “benefits” are based on market definitions that fly in the face of FCC precedent, are not transaction-specific, and are actually harms in the form of higher prices; and
• Left the door open to the possibility that the FCC could modify the National Cap Rule before acting on their applications. This ignored that the 39% cap is statutory and cannot be altered by the FCC absent Congressional action.
ACA noted that it is pleased that, in response to arguments of ACA and others, Sinclair-Tribune have now made clear their commitment not to seek a waiver of FCC rules that currently make the proposed transaction unlawful. The FCC should also hold them to this promise.
About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing about 750 smaller and medium-sized, independent cable companies who provide broadband services for nearly 7 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA’s members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit https://www.americancable.org/