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FCC examines whether Sinclair showed "Candor shortage" when trying to buy Tribune



The Federal Communications Commission is investigating if

Sinclair Broadcast Group
Inc.


SBGI 0.79%

mislead the governmental body during its failed attempt to buy

Tribune Media

last year.

In a June 25 letter to Sinclair, considered by The Wall Street Journal, the FCC said it was investigating whether the country's largest owner of local TV stations "involved in wild representation and / or lack of goodness" with the agency when it sought approval for $ 3.9 billion.

Nexstar Media Group
Inc.

then penetrated last December and bought the Tribune in an agreement valued at $ 4.1

billion still pending FCC approval.

If the FCC decides that Sinclair has deceived the Agency, it may order a hearing on the matter. An FCC hearing can lead to significant fines or even the possible loss of broadcast licenses, although such extreme actions are rare.

"This is not new," says a Swedish spokesman, Wednesday. with the FCC "regarding certain allegations raised last year. An FCC spokesman was unavailable for comment.

" This is a big deal. The worst thing you can do for the FCC is lie, "said Andrew Schwartzman, a professor at Georgetown Law." This is the only way to lose a license to a television company. Sinclair needs to prove that they are not lying or that they do not mean and will not return. "

The government probe into Sinclair comes as the company is in the midst of acquiring 21 regional sports channels from Walt Disney Co. for more than $ 10 billion. This agreement requires approval by the Ministry of Justice.

In the letter, the FCC said it is investigating If Sinclair's plans to spin from stations to comply with FCC rules and receive approval of the Tribune agreement would have left the broadcast in de facto control of the stations.

A Sinclair spokesman did not respond promptly to comment requests Wednesday, Sinclair said earlier that its spinoff plans were "in line with structures used by Sinclair and many other television stations for many years with FCC's full approval."

A hearing on allegations could affect Sinclair's future broadcast license renewals, as well as its ability to acquire stations in the future.

"This may be the agency starting to look at these claims and decide, h what needs to be done with them before the licensing renewals come up next year, "said Washington, DC, lawyer Jack Goodman, representing broadcast stations but not Sinclair.

In the letter, the FCC said that Sinclair has until 9 July to respond, warned that "deliberately and intentionally making any false statement or concealing any material fact in response" to its query "is punishable by fine or imprisonment and violation of communications law. "

Such a transaction involved Tribune's WGN TV Chicago, which Sinclair said it would sell to car dealer operator Steven Fader for $ 60 million. Not only was this price far below the station's value by industrial analysts, but Sinclair President David Smith sits on the board of a car dealership tube where Mr. Father is CEO.

In his letter to Sinclair, the FCC said it wanted every detail on how Sinclair came up with the $ 60 million value as well as all the discussions the company had with Mr. Father about who would control the station's programming, staff and finances. Mr. Father couldn't reach comments.

The FCC wants similar information on Sinclair's proposed plans to transfer television stations in Dallas and Houston to Cunningham Broadcasting, operated by the property at Mr. Smith's mother, Carolyn Smith.

This is not the first time Sinclair's actions have made it a goal for the government. In 2016, FCC Sinclair fined $ 9.5 million allegedly failing to negotiate in good faith in a dispute with satellite TV stations

Dish Network
Corp.

In 2017, the FCC Sinclair fined $ 13.4 million for allegedly missing the brand programming it aired as sponsored content.

The failed Sinclair-Tribune agreement also triggered a major investigation by the Justice Department on whether TV station owners violated antitrust law by sharing ad sales information that could potentially lead to higher advertising rates. Sinclair settled with the Ministry of Justice last November.

Although most local TV stations have low profiles, Sinclair has a strong national presence not only because of its size, but also because its news programming is known to have a conservative editorial voice.

In the presidential election in 2016, the Sinclair stations were considered a security site for President Trump's campaign. Last year, Sinclair was criticized for demanding that its news anchors to read a segment critically over the national news media and accuse sales outlets of flying "false stories without checking facts first."

Earlier this week, three Democratic candidates for President Sens. Elizabeth Warren (D., Mass.), Cory Booker (D., NJ) and Bernie Sanders (D., Vt.) – sent a letter to the FCC and Justice Department to raise concerns about the proposed Regional Sports Agreement as it could reduce competition in the industry and lead to higher prices for consumers.

Write to Joe Flint at joe.flint@wsj.com and Lillian Rizzo at Lillian.Rizzo@wsj.com


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