Tribune to Sinclair: Judge’s gavel instead of merger’s handshake

It’s a great day in broadcasting, or as great as things can get in this day and age. There will be no merger between Sinclair Broadcast Group and Tribune Media.

Today, according to Axios, Tribune announced it

“terminated its $3.9 billion merger agreement with Sinclair Broadcasting and that it has filed a lawsuit for breach of contract.”

— UPDATE: Sinclair counter-suing Tribune, accusing its onetime takeover target of a “deliberate effort to exploit and capitalize on an unfavorable and unexpected reaction from the FCC to capture a windfall.” —

Tribune sued in Delaware Chancery Court. It’s asking for “approximately $1 billion of lost premium to Tribune’s stockholders and additional damages in an amount to be proven at trial,” according to TVNewsCheck.

The Wall Street Journal reported Tribune alleges Sinclair “failed to make sufficient efforts to get their $3.9 billion deal approved by regulators.”

The first sign of trouble from the Federal Communications Commission, other than delays, came last month. It was a surprise, considering how the FCC greased the wheels for the takeover, whether on purpose or not. (That’s under investigation.)

— UPDATE: The FCC inspector general cleared Chairman Ajit Pai of being unfairly biased in favor of the Sinclair Broadcast Group–Tribune Media merger. —

TVNewsCheck continued,

“Tribune claimed that Sinclair used ‘unnecessarily aggressive and protracted negotiations’ with the Department of Justice and the FCC over regulatory requirements and that it refused to sell the stations it needed to in order for regulatory approval.”

In the filing, Tribune said:

“Beginning in November 2017, DOJ repeatedly told Sinclair that it would clear the merger if Sinclair simply agreed to sell stations in the 10 markets the parties had identified in the merger agreement. DOJ’s message to Sinclair could not have been clearer: if Sinclair agreed to sales in those 10 markets, ‘We would be done.’”

That’s what happens when you get into business with a company like Sinclair. I’ve written plenty about it and its top officials, including those who inherited the company.

Personally, it proves what I wrote here on July 25,

“Even better, it looks like one of the seven deadly sins – greediness – may have killed the deal!”

The deal, while complex and controversial, should not have been a problem.

The biggest hurdle was supposed to be national ownership rules, but ironically, the FCC took care of that just weeks before the deal’s May 2017 announcement.

Bloomberg reported,

“Broadcasters may own stations that reach 39 percent of U.S. households – but how that audience is measured has been in dispute. Last year, the FCC’s Republican majority reinstated a measure that treats ultra-high-frequency or UHF band stations as counting for just half of their lower-frequency counterparts, enabling broadcasters to own more stations and enjoy greater reach.”

Democrats had gotten rid of the so-called UHF discount the year before, since it started way back at a time when there where major reception differences between VHF and UHF stations on your television dial.

“FCC Chairman Ajit Pai, a Republican appointed by President Donald Trump,” is even under investigation by his own agency’s inspector general because of the timing of the reinstatement and whether it was done for Sinclair.

But still, the deal would’ve been so big that some stations would have to go, and that’s what led to problems. Specifically, it was which stations the combined Sinclair-Tribune would own, would have to go.

Sinclair and Tribune are two of the country’s largest broadcasters.

Sinclair, the largest, claims it “owns, operates and/or provides services to 191 television stations in 89 markets.”

According to TVSpy,

“Sinclair was proposing to control 233 stations in 108 markets, adding 42 Tribune stations to their current roster.”

sinclair before tribune
Sinclair’s reach, without Tribune

That would’ve included the nation’s biggest TV markets where Sinclair has no presence, like New York, Los Angeles, Chicago and Philadelphia.

But there was a lot of pushback from public interest groups fighting for smaller companies and localism, and against micromanaging the largest group of stations in the country.

Boris Epshteyn clip art

They were joined by Democrats concerned Sinclair would give even more stations its conservative bent. Sinclair requires so-called must-runs, including airing commentaries by one of President Trump’s former communications spokespersons, Boris Epshteyn. The company also forced anchors at their stations to read a message that parroted President Trump’s talking points about the media.

jared kushnerAnd President Trump’s son-in-law and advisor Jared Kushner said Sinclair executives worked with the campaign to spread pro-Trump messages in Sinclair newscasts when he was running against Hillary Clinton, which Sinclair vehemently denied.

Plus, conservative media outlets were afraid Sinclair would get in the game and interfere with their efforts to compete with Fox News. And all the time passing didn’t help Sinclair’s case.

Meanwhile, Sinclair defended the merger as necessary consolidation in the face of competition from cable and tech, according to NBC News.

The network also reported it came “in the face of opposition from the FCC and questions about whether Sinclair tried to mislead the government with its divestiture plan, in which it sought to sell some stations to parties close to Sinclair.” (I’ve written about these so-called sidecar agreements time and time again.)

The first sign of trouble, other than delays, came last month.

TVNewsCheck wrote Pai, perhaps the deal’s biggest cheerleader after President Trump, decided he had “serious concerns” about the Tribune stations Sinclair would get in Chicago, Dallas and Houston – that Sinclair might still be able to operate them “in practice, even if not in name.”

WGN-TV

TVSpy put it this way:

“Pai suggested Sinclair would sell but still operate those stations, which is illegal. The FCC then sent the deal for review by an administrative law judge.”

Sinclair has been known to use shell corporations, local marketing agreements and joint sales agreements to operate stations it doesn’t own. (See Cunningham Broadcasting, for example. Click here for Baltimore and here for mid-Michigan.)

There were also concerns about spinning off stations for unreasonably low prices.

Tribune’s complaint alleges

“Sinclair’s material breaches were willful breaches of the merger agreement, because they were deliberate acts and deliberate failures to act that were taken with the actual knowledge that they would or would reasonably be expected to result in or constitute a material breach.

“As a result of Sinclair’s breaches, Tribune has sustained financial harm and has lost the expected benefits of the merger agreement.”

As I wrote here on July 27, “Tribune can leave Sinclair at the alter/chuppah on Aug. 8.” That was yesterday.

This morning, Tribune released this statement:

“Tribune Media Company today announced that it has terminated its merger agreement (the ‘Merger Agreement’) with Sinclair Broadcast Group, Inc. (‘Sinclair’), and that it has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract. The lawsuit seeks compensation for all losses incurred as a result of Sinclair’s material breaches of the Merger Agreement.

“In the Merger Agreement, Sinclair committed to use its reasonable best efforts to obtain regulatory approval as promptly as possible, including agreeing in advance to divest stations in certain markets as necessary or advisable for regulatory approval. Instead, in an effort to maintain control over stations it was obligated to sell, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission (the ‘FCC’) over regulatory requirements, refused to sell stations in the markets as required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay—all in derogation of Sinclair’s contractual obligations. Ultimately, the FCC concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC’s ownership rules and, accordingly, put the merger on indefinite hold while an administrative law judge determines whether Sinclair misled the FCC or acted with a lack of candor. As elaborated in the complaint we filed earlier today, Sinclair’s entire course of conduct has been in blatant violation of the Merger Agreement and, but for Sinclair’s actions, the transaction could have closed long ago. (I highlighted that last sentence. —Lenny)

“‘In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,’” said Peter Kern, Tribune Media’s Chief Executive Officer. ‘This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.’”

(Tribune’s statement continued with earnings information and then returned to the Sinclair situation. See that at the bottom of this post, along with its CEO’s memo to employees.)

That’s a big change from exactly three weeks ago, July 19, when Tribune responded to the FCC issuing its Hearing Designation Order with this statement:

“Tribune Media has now had the opportunity to review the FCC’s troubling Hearing Designation Order.  We are currently evaluating its implications and assessing all of our options in light of today’s developments.

“We will be greatly disappointed if the transaction cannot be completed, but will rededicate our efforts to running our businesses and optimizing assets.  Thanks to the great work of our employees, we are having a strong year despite the significant distraction caused by our work on the transaction and, thus, are well-positioned to continue maximizing value for our shareholders going forward.”

Click here for the 62-page complaint.

In case you don’t plan to read it all, The Washington Post reported Tribune accused Sinclair of

“engaging in ‘belligerent and unnecessarily protracted negotiations’ with the FCC as well as the Justice Department.” Also, it argued “in its lawsuit that Sinclair had been ‘confrontational with and belittling of DOJ staff.’ During negotiations, for example, Sinclair’s general counsel, Barry Faber, challenged the Justice Department’s top antitrust official, Makan Delrahim, telling him at one point, ‘sue me,’ Tribune alleged. In another meeting, Faber accused Delrahim of ‘misunderstand[ing] the industry,’ the suit said.”

Also new, The Post reported Tribune alleged it threatened to sue Sinclair in February if it didn’t divest stations to secure the DOJ’s support, prompting Sinclair to revise its offer.

Click here for 176 pages of exhibits.

Sinclair, for its part, put out this response:

“Sinclair Broadcast Group, Inc. announced today that it received a termination notice of its Merger Agreement from Tribune Media Company. In response, the Company subsequently has withdrawn with prejudice its FCC applications to acquire Tribune and filed with the Administrative Law Judge a notice of withdrawal of the applications and motion to terminate the hearing.” ‘’

“‘We are extremely disappointed that after 15 months of trying to close the Tribune transaction, we are instead announcing its termination,’ commented Chris Ripley, President & Chief Executive Officer. ‘We unequivocally stand by our position that we did not mislead the FCC with respect to the transaction or act in any way other than with complete candor and transparency. As Tribune, however commented, in their belief, the FCC’s recent designation of the deal for a hearing in front of an Administrative Law Judge would have resulted in a potentially long and burdensome process and, therefore, pursuing the transaction was not in the best interest of their company and shareholders. As for Tribune’s lawsuit, we fully complied with our obligations under the merger agreement and tirelessly worked to close this transaction. The lawsuit described in Tribune’s public filings today is entirely without merit, and we intend to defend against it vigorously.

“‘Nonetheless, we wish to thank both our and Tribune’s employees and our many advisers who have committed a tremendous amount of time and effort over the past 15 months towards the acquisition of Tribune. It is unfortunate that those efforts have not been realized. The combined company would have benefited the entire broadcast industry and the public through the advancement of ATSC 3.0, increased local news and enhanced programming.’”

FTVLive’s Scott Jones brought more from Ripley.

Chris Ripley statement

Despite Sinclair stock starting lower today, the company announced it’s buying back up to $1 billion of its Class A common shares.

“We strongly believe in the long term outlook of our company and disagree with the market’s current discounted view on our share price,” Ripley said. “The $1 billion authorization does not use our future free cash flow generation, but simply the excess cash currently on our balance sheet.”

Sinclair stock ended the day 2.58 percent higher, but fell in after-hours trading.

The FCC did not comment today.

The Sinclair-Tribune deal would’ve led to several others. Stations that put the combination above the legal ownership limit were supposed to be spun off to several different companies. Now they won’t.

One of those companies is 21st Century Fox, which The Hollywood Reporter described as partially merging with Disney/ABC. Disney still plans to buy “the Fox film and TV studio, Nat Geo, FX Networks, Star India, 39 percent of Sky and 30 percent of Hulu … along with 22 regional sports networks (RSNs).”

Disney is selling those regional sports networks because the Justice Department was worried they “coupled with ESPN would create a sports monopoly.”

Yahoo! Finance reports Disney will have 90 days from the deal closing to sell, and CEO Bob Iger said on Tuesday’s earnings call,

“The RSNs will be sold, and the process of selling them is actually already beginning. Conversations are starting, interest is being expressed. And it’s likely that we’ll negotiate a deal to sell them but the deal will not be fully executed or close until after the overall deal for 21st Century Fox closes.”

It added, Iger said Disney “assumed the responsibility of divestiture” in December 2017 when it first made an offer to Fox, “if the regulatory process demanded that we do that.”

There was never a possibility Fox would keep the networks or buy them back.

Yahoo! suggests potential buyers are Comcast, which has its own RSNs and lost the bidding war for Fox’s assets; Discovery Communications; AT&T, owner of DirecTV and now also Time Warner, but the Justice Department is appealing that; Verizon, owner of Fios; and another cable company, Charter Communications.

So Fox will be left with “the Fox broadcast network, FS1, FS2, Fox Business Network and the Fox News Channel, which, collectively, is known for now as New Fox,” according to The Hollywood Reporter.

It planned to buy some of those stations that had to be spun off from the Sinclair-Tribune deal, probably insisting on the number and places (NFL football markets), or threatening to pull the stations’ affiliations and put Fox programming on a competitor.

“Live sports is clearly the most valuable content in our industry,” executive chairman Lachlan Murdoch said during a conference call, yesterday. His company is now paying a fortune for rights to Thursday Night Football.

Thursday Night Football logo

But now, with no merger, the station sales to Fox and others are in jeopardy, and decisions whether to sell or not return to Sinclair and Tribune.

However, new deals may already be in the works. Just Monday, Tribune announced it

“reached a comprehensive agreement with Fox Broadcasting Company to renew the existing Fox affiliations of eight Tribune Media television stations, including KCPQ-TV (Seattle), KDVR-TV (Denver), WJW-TV (Cleveland), KTVI-TV (St. Louis), WDAF-TV (Kansas City), KSTU-TV (Salt Lake City), WITI-TV (Milwaukee), WGHP-TV (Greensboro, NC). Terms of the agreement were not disclosed.”

So we can expect those stations to keep airing Fox programming unless there’s something in the “terms of the agreement” that mentions the merger not happening.

On top of that, last week, FTVLive’s Scott Jones reported, “Fox is very interested in a number of the Tribune stations” – still – and, “the suits from Fox have been spotted inside (those) Tribune stations looking around” as if to buy. So we’ll see if it ends up with more Tribune stations than it was expected to buy under the deal.

Fox WSFL WSVN

Not mentioned is Miami/Fort Lauderdale Tribune station WSFL. That CW affiliate was going to be sold to Fox, even though Fox has an affiliation agreement with Sunbeam’s WSVN in South Florida. What would’ve happened if Fox bought a competitor was anyone’s guess, but that’s now a moot point.

Of course, the big question is whether Tribune will still sell at all. TVNewsCheck’s Harry Jessell reported Tribune CEO Peter Kern cast some doubt on that today, telling analysts the company may want to “enhance” its TV station portfolio.

cox media group

We know Cox Media Group is exploring selling. Others will if the price is right, and prices should rise if there are fewer, bigger companies in the business – especially if they’re allowed to buy more after the FCC takes another look at raising ownership caps.

Despite uncertainty, there’s probably a lot of relief at Tribune stations they won’t have bosses from Sinclair.

TVNewsCheck’s Harry Jessell – who I quote a lot – recently wrote

“how Sinclair’s aggressive approach in its dealing with the Justice Department and the FCC with regard to its merger with Tribune has been polluting the best regulatory atmosphere in Washington since the Reagan administration.”

Jessell ended his column by writing,

“So, let’s recap. Sinclair’s attempt to win regulatory approval of its Tribune merger has so far severely damaged Sinclair’s standing at the FCC, aggravated the most broadcast-friendly FCC chairman in decades, subjected its own and several other broadcast groups’ basic business dealings to intense Justice Department scrutiny and exposed those same groups to (an antitrust) lawsuit that, no matter how frivolous, needs to be answered.”

As promised earlier, this is the rest of today’s Tribune statement:

RECENT DEVELOPMENTS

Sinclair Acquisition

On May 8, 2017, the Company entered into the Merger Agreement with Sinclair, providing for the acquisition by Sinclair of all of the outstanding shares of the Company’s Class A common stock and Class B common stock by means of a merger of Samson Merger Sub Inc., a wholly owned subsidiary of Sinclair, with and into Tribune Media Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Sinclair.

In the Merger, each share of the Company’s common stock would have been converted into the right to receive (i) $35.00 in cash, without interest and less any required withholding taxes, and (ii) 0.2300 of a share of Class A common stock of Sinclair.

The consummation of the Merger was subject to the satisfaction or waiver of certain important conditions, including, among others: (i) the approval of the Merger by the Company’s stockholders, (ii) the receipt of approval from the FCC and the expiration or termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and (iii) the effectiveness of a registration statement on Form S-4 registering the Sinclair Common Stock to be issued in connection with the Merger and no stop order or proceedings seeking the same having been initiated by the Securities and Exchange Commission (the “SEC”).

Pursuant to Section 7.1(e) of the Merger Agreement, Sinclair was “entitled to direct, in consultation with the Company, the timing for making, and approve (such approval not to be unreasonably withheld) the content of, any filings with or presentations or submissions to any Governmental Authority relating to this Agreement or the transactions contemplated hereby and to take the lead in the scheduling of, and strategic planning for, any meetings with, and the conducting of negotiations with, Governmental Authorities relating to this Agreement or the transactions contemplated hereby.” Applications to regulatory authorities made jointly by Sinclair and Tribune in connection with the Merger were made at the direction of Sinclair pursuant to its authority under this provision of the Merger Agreement.

On September 6, 2017, Sinclair’s registration statement on Form S-4 registering the Sinclair Common Stock to be issued in the Merger was declared effective by the SEC.

On October 19, 2017, holders of a majority of the outstanding shares of the Company’s Class A Common Stock and Class B Common Stock, voting as a single class, voted on and approved the Merger Agreement and the transactions contemplated by the Merger Agreement at a duly called special meeting of Tribune Media Company shareholders.

The applications seeking FCC approval of the transactions contemplated by the Merger Agreement (the “Applications”) were filed on June 26, 2017, and the FCC issued a public notice of the filing of the Applications and established a comment cycle on July 6, 2017. Several petitions to deny the Applications, and numerous other comments, both opposing and supporting the transaction, were filed in response to the public notice. Sinclair and the Company jointly filed an opposition to the petitions to deny on August 22, 2017 (the “Joint Opposition”). Petitioners and others filed replies to the Joint Opposition on August 29, 2017. On September 14, 2017, the FCC’s Media Bureau issued a Request for Information (“RFI”) seeking additional information regarding certain matters discussed in the Applications. Sinclair submitted a response to the RFI on October 5, 2017. On October 18, 2017, the FCC’s Media Bureau issued a public notice pausing the FCC’s 180-day transaction review “shot-clock” for 15 days to afford interested parties an opportunity to comment on the response to the RFI. On January 11, 2018, the FCC’s Media Bureau issued a public notice pausing the FCC’s shot-clock as of January 4, 2018 until Sinclair has filed amendments to the Applications along with divestiture applications and the FCC staff has had an opportunity to review any such submissions. On February 20, 2018, the parties filed an amendment to the Applications (the “February 20 Amendment”) that, among other things, (1) requested authority under the FCC’s “Local Television Multiple Ownership Rule” (the “Duopoly Rule”) for Sinclair to own two top four rated stations in each of three television markets (the “Top-4 Requests”) and (2) identified stations (the “Divestiture Stations”) in 11 television markets that Sinclair proposed to divest in order for the Merger to comply with the Duopoly Rule and the National Television Multiple Ownership Rule. Concurrently, Sinclair filed applications (the “Divestiture Trust Applications”) proposing to place certain of the Divestiture Stations in an FCC-approved divestiture trust, if and as necessary, in order to facilitate the orderly divestiture of those stations following the consummation of the Merger. On February 27, 2018, in furtherance of certain undertakings made in the Applications and the February 20 Amendment, the parties filed separate applications seeking FCC approval of the sale of Tribune’s stations WPIX-TV, New York, New York, and WGN-TV, Chicago, Illinois, to third-party purchasers. On March 6, 2018, the parties filed an amendment to the Applications that, among other things, eliminated one of the Top-4 Requests and modified the remaining two Top-4 Requests. Also on March 6, 2018, the parties modified certain of the Divestiture Trust Applications. On April 24, 2018, the parties jointly filed (1) an amendment to the Applications (the “April 24 Amendment”) that superseded all prior amendments and, among other things, updated the pending Top-4 Requests and provided additional information regarding station divestitures proposed to be made by Sinclair in 15 television markets in order to comply with the Duopoly Rule or the National Television Multiple Ownership Rule, (2) a letter withdrawing the Divestiture Trust Applications and (3) a letter withdrawing the application for approval of the sale of WPIX-TV to a third-party purchaser. In order to facilitate certain of the compliance divestitures described in the April 24 Amendment, between April 24, 2018 and April 30, 2018, Sinclair filed applications seeking FCC consent to the assignment of license or transfer of control of certain stations in 11 television markets.

On May 8, 2018, the Company, Sinclair Television Group, Inc. (“Sinclair Television”) and Fox Television Stations, LLC (“Fox”) entered into an asset purchase agreement (the “Fox Purchase Agreement”) to sell the assets of seven network affiliates of Tribune for $910.0 million in cash, subject to post-closing adjustments. The network affiliates subject to the Fox Purchase Agreement are: KCPQ (Tacoma, WA); KDVR (Denver, CO); KSTU (Salt Lake City, UT); KSWB-TV (San Diego, CA); KTXL (Sacramento, CA); WJW (Cleveland, OH); and WSFL-TV (Miami, FL). The closing of the sale pursuant to the Fox Purchase Agreement (the “Closing”) was subject to approval of the FCC and clearance under the HSR Act, as well as the satisfaction or waiver of all conditions of the consummation of the Merger, which was scheduled to occur immediately following the Closing.

On May 14, 2018, Sinclair and Tribune filed applications for FCC approval of additional station divestitures to Fox pursuant to the Fox Purchase Agreement. On May 21, 2018, the FCC issued a consolidated public notice accepting the divestiture applications filed between April 24, 2018 and May 14, 2018, for filing and seeking comment on those applications and on the April 24 Amendment, and establishing a comment cycle ending on July 12, 2018.

On July 16, 2018, the Chairman of the FCC issued a statement that he had “serious concerns about the Sinclair/Tribune transaction” because of evidence suggesting “that certain station divestitures that have been proposed to the FCC would allow Sinclair to control [the divested] stations in practice, even if not in name, in violation of the law,” and that he had circulated to the other Commissioners “a draft order that would designate issues involving certain proposed divestitures for a hearing in front of an administrative law judge.”

On July 18, 2018, at the direction of Sinclair pursuant to its authority under the Merger Agreement, Sinclair and Tribune jointly filed an amendment to the Applications reflecting that the applications for divestiture of WGN-TV (Chicago), KDAF (Dallas), and KIAH (Houston) filed in connection with the April 24 Amendment were being withdrawn, that WGN-TV would not be divested, and that KDAF and KIAH would be placed in a divestiture trust pending sales to one or more new third parties. The applications for divestiture of WGN-TV, KDAF and KIAH were withdrawn by concurrent letter filings. On July 19, 2018, the FCC released a Hearing Designation Order (“HDO”) referring the Applications to an FCC Administrative Law Judge (“ALJ”) for an evidentiary hearing to resolve what the FCC concluded are “substantial and material questions of fact” regarding (1) whether Sinclair was the real party-in-interest to the divestiture applications for WGN-TV, KDAF, and KIAH, and, if so, whether Sinclair engaged in misrepresentation and/or lack of candor in its applications with the FCC; (2) whether consummation of the merger would violate the FCC’s broadcast ownership rules; (3) whether grant of the Applications would serve the public interest, convenience, and/or necessity; and (4) whether the Applications should be granted or denied. The HDO designated as parties to the proceeding the FCC’s Enforcement Bureau and persons who had filed formal petitions to deny the Applications, and directed the ALJ to establish a procedural schedule by Friday, August 24, 2018.

On August 2, 2017, the Company received a request for additional information and documentary material, often referred to as a “second request”, from the United States Department of Justice (the “DOJ”) in connection with the Merger Agreement. The second request was issued under the HSR Act. Sinclair received a substantively identical request for additional information and documentary material from the DOJ in connection with the transactions contemplated by the Merger Agreement. The parties entered into an agreement with the DOJ on September 15, 2017 by which they agreed not to consummate the Merger Agreement before certain dates related to their certification of substantial compliance with the second request (which occurred in November 2017) and to provide the DOJ with 10 calendar days’ notice prior to consummating the Merger Agreement. Although Sinclair and DOJ reached agreement on a term sheet identifying the markets in which stations would have to be divested, they did not reach a definitive settlement and their discussions on significant provisions remained ongoing as of August 2018.

Pursuant to the Merger Agreement, the Company had the right to terminate the Merger Agreement if Sinclair failed to perform in all material respects its covenants, and such failure was not cured by the end date of August 8, 2018. Additionally, either party may terminate the Merger Agreement if the Merger is not consummated on or before August 8, 2018 (and the failure for the Merger to have been consummated by such date was not primarily due to a breach of the Merger Agreement by the party terminating the Merger Agreement). On August 9, 2018, the Company provided notification to Sinclair that it had terminated the Merger Agreement, effective immediately, on the basis of Sinclair’s willful and material breaches of its covenants and the expiration of the second end date thereunder. In connection with the termination of the Merger Agreement, on August 9, 2018, the Company provided notification to Fox that it has terminated the Fox Purchase Agreement, effective immediately. Under the terms of each of the Merger Agreement and the Fox Purchase Agreement, no termination fees are payable by any party.

On August 9, 2018, the Company filed a complaint in the Chancery Court of the State of Delaware against Sinclair, alleging breach of contract under the Merger Agreement. The complaint alleges that Sinclair willfully and materially breached its obligations under the Merger Agreement to use its reasonable best efforts to promptly obtain regulatory approval of the Merger so as to enable the Merger to close as soon as reasonably practicable. The lawsuit seeks damages for all losses incurred as a result of Sinclair’s breach of contract under the Merger Agreement.

This is Tribune CEO Kern’s memo to employees, thanks again to FTVLive’s Scott Jones:

Tribune Team,

Earlier this morning we announced the termination of our proposed merger with Sinclair and that we have filed a lawsuit against Sinclair for breach of contract—attached (above —Lenny) is the press release we issued a short time ago.

Given the developments of the last few weeks, and the decision by the Federal Communications Commission to refer certain issues to an administrative law judge in light of Sinclair’s conduct, it’s highly unlikely that this transaction could ever receive FCC approval and be completed, and certainly not within an acceptable timeframe. This delay and uncertainty would be detrimental to our company, to our business partners, to our employees and to our shareholders. Accordingly, our Board made the decision to terminate the merger agreement with Sinclair to enable us to refocus on our many opportunities to drive the company forward and enhance shareholder value.

As for the lawsuit, we are confident that Sinclair did not live up to its obligations under the merger agreement and we intend to hold them accountable. A suit like this does not get resolved overnight and it is the last thing you should be thinking about, but I want you to know that Tribune did everything it was supposed to do, and we will make sure we are treated fairly.

Right now, I am sure many of you are still absorbing the news and wondering what it means for our company, for our future, and most especially for each of you. I want to take a moment to answer these questions and address some of your concerns as we now re-adjust to the old normal of running our great and storied Tribune Media Company.

So, let’s begin there—Tribune Media remains as strong as ever, with great TV stations, important local news and sports programming, a re-energized and financially powerful cable network, and a terrific history of serving our viewers, our advertisers, and our MVPD and network partners. You need look no further than the exceptional financial results we released today for proof of that. Our consistent success is directly related to your talent, your experience, your innovation, and your willingness to give your best every day.

As for the future, we continue to live in complex times in the media world. New consumer habits, new entrants to the space, new competitors every day, and consolidation going on all around us. Rapid change has become the norm—it’s impossible to predict the next big thing. What I do know, though, is that we’ve got valuable assets, great people running them, and we remain one of the preeminent broadcasting companies in America.

No doubt the rumor mill will begin anew with speculation about who might buy us or who we might buy or whether the regulatory landscape still favors consolidation. We can’t do anything about such speculation. What we can do is rededicate ourselves to our own performance. Let’s shake off the cobwebs of deal distraction, ignore the outside noise, and continue delivering on our commitment to each other, to our customers, to our partners and to the communities we serve. If we do that, the rest will take care of itself.

Let’s get together for a companywide town hall meeting tomorrow at Noon ET. We’ll broadcast the meeting live to our business units, talk more about all these issues and take your questions—you can submit questions in advance of the meeting to: questions@tribunemedia.com.  In the meantime, if you have any concerns, our HR team is ready to help; and Gary Weitman can handle any media inquiries you might get.

Thank you, again,
Peter

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Sinclair sinks, Trump’s temper, Cox’s cash value

There’s something to be said for waiting before starting to write. That’s not my nature. I want to get things out first. I type very well but nobody can do it as quickly as my brain, so I often dictate into a phone and email myself. Then, I make any corrections and additions, and create the graphics and email preferences.

But this saga of Sinclair Broadcast Group trying to buy Tribune Media that has been going on for more than a year and suddenly failing last week – supposedly failing – is full of interesting details.

NO sinclair tribune

I wrote about a lot of them, Tuesday night. That was mostly background. You know how little I admire Sinclair and the people who run it. Tonight, you’ll see exactly what went wrong for the deal and what I think should be done. Let’s just say what went wrong could’ve been a lot of what I wrote Tuesday night!

I’m going to suggest starting by reading that last post, if you haven’t. It gives a lot of background about why Sinclair is so despised – that I’ve written about for months but conveniently put in one place – so there’s no sense repeating it here.

cox media group

But first, the latest, and that’s Cox Media Group – one of the best corporations owning TV stations out there, and a private one – is exploring putting itself up for sale.

Yesterday, FTVLlive’s Scott Jones got a secret copy of the talking points Cox managers are supposed to use while talking to employees. Let’s face it, “talking points” is another phrase meaning public relations. In other words, they’re trying to convince the workers to keep working extra hard because everything is going to be great! (I hope you used your best Tony the Tiger when you read that.)

Of course, that’s not how employees are feeling. When your company suddenly sets itself up to be bought, there is lots of uncertainty. You know spending will go down and jobs will not be filled, so the company’s financials look more attractive. And being bought by another major established company could lead to layoffs. But you know that’s not in the talking points which you can see below in this six-page slideshow.

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Cox’s 14 TV stations are pretty good and most are highly-rated ones. From left to right, by row, they’re the ABC affiliate in Atlanta; ABC and independent in Orlando; Fox in Boston; CBS in Seattle; NBC in Pittsburgh; ABC and independent in Charlotte; Fox and CBS in Jacksonville; Fox in Memphis; CBS in Dayton, Ohio; Fox in Tulsa, Okla.; and also a “supply-side platform that brings automation and data-driven targeting to the buying and selling of television advertising” called Videa.

cox stations

There are also 61 radio stations, 4 daily newspapers, 11 non-daily papers, 16 digital brands, and one local cable channel.

FTVLive’s Scott Jones also got a market analyst report from Wells Fargo about how much Cox Media may be worth. The answer it gives is $2.65 billion, but consider many factors including the number of willing buyers, whether the stations get split up, and whether Tribune goes back on the market.

wells fargo cox

See Tuesday’s post for a lot more links to, and details on, the rest of Atlanta-based Cox.

So FCC Chairman Ajit Pai was arguably putting himself on the line while supporting the Sinclair-Tribune merger when surprisingly, last week, he said in a statement:

“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. … When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction. Instead, the law requires the FCC to designate the transaction for a hearing in order to get to the bottom of those disputed issues.”

How surprising?

Pai embraced the merger so much, he’s under investigation by the FCC’s inspector general for allegedly greasing the wheels by bringing back the UHF discount rule weeks before the deal was announced. That way, the new, larger company could still meet the FCC ownership limit of 39 percent of U.S. households, rather than vastly exceeding them.

— UPDATE: The FCC inspector general cleared Chairman Ajit Pai of being unfairly biased in favor of the Sinclair Broadcast Group–Tribune Media merger. —

sinclair before tribune
Sinclair’s reach now, without Tribune

Then yesterday – at an awkward moment for Pai, Sinclair and Tribune – a Washington-based U.S. Appeals Court rejected a challenge to the FCC reinstating the UHF discount that could’ve and could still pave the way for the merger. The three-judge panel was comprised of two President Barack Obama nominees and one President Trump nominee. They dismissed the case on technical grounds without considering its merits, ruling the activist groups that filed suit hadn’t shown they’d be injured by the consolidation at the heart of their case. What this really means is Tribune could be worth more if it pulls out of the deal, because other potential suitors will have more flexibility to make offers. Tribune can leave Sinclair at the alter/chuppah on Aug. 8.

The UHF discount, started in 1985, let companies with UHF (channels 14+) stations only count half the coverage area towards the ownership limit. But that was when there was a big difference between watching channels 2 to 13, and channels 14+. With today’s technology – and cable, satellite and computers added to the mix, and broadcast signals digital rather than analog – the quality looks the same. The rule was ended in 2016, just before the end of President Obama’s administration.

So why bring back the rule last year? For big corporations, up against the ownership limit, urging Pai to reinstate it so they could buy more stations – exactly what Sinclair needed to merge with Tribune.

According to Variety, Commissioner Mignon Clyburn, the sole Democrat on the FCC at the time, warned it would diminish diversity, competition, and localism, and she predicted a wave of mergers and acquisitions.

Variety wrote at the time,

“She showed a chart from Bloomberg showing how major station groups benefit from the discount. The largest, ION Media, reaches 33.7% of the country with the discount, but 65.2% without. Univision reaches 23.6% with the discount, but 44.8% without. When the discount was repealed last summer, station groups were allowed to retain their existing holdings, but they would be forced to divest assets in the event of a merger or corporate takeover.”

tv owner population share

But Pai argued the FCC would start examining the media ownership cap and reinstating the UHF discount would give the FCC a “blank slate.” The examination started in December.

generic tvA year later, in April 2018, Variety reported a panel of appellate judges asked why the FCC reinstated the rule and raised some concerns. Two of the three judges on the D.C. Circuit Court of Appeals also expressed concerns the FCC had restored a rule that was considered obsolete.

According to Variety, Judge Gregory Katsas noted to the FCC’s attorney, James Carr, that while the FCC

“might want to raise the cap,” there was “no reason for thinking at that the end of the day, part of the solution will be keeping the discount.”

“I think that is probably fair, your honor,” Carr replied. He argued that the UHF discount shouldn’t be eliminated without considering its implications to the 39% cap.

Meanwhile, CEO Chris Ruddy of conservative TV news network Newsmax said, “The judges on the D.C. Circuit reviewing the FCC’s UHF discount were left scratching their heads wondering why the rule was re-instated when everyone — Republicans and Democrats alike — agree that the discount is an analog relic and makes no sense in a digital world.

“The FCC should avoid the appearance of impropriety and proceed with a transparent national ownership cap proceeding to set a level playing field before approving any merger that benefits just one company, namely Sinclair.”

He also said he told President Trump strict limits on national TV ownership are needed not only to keep a lid on Sinclair, but also on the ‘liberal’ broadcast networks.

I told him [Trump] about my opposition because Sinclair would reach 70 percent of U.S. homes and — while I don’t disagree necessarily with Sinclair’s editorial point of view — I did not want to see NBC and ABC and the big liberal networks…[reaching] 70 percent.

“I think that would have been very dangerous if NBC was dictating the local news coverage in Des Moines, Iowa,” Ruddy said.

Keep in mind, Ruddy’s Newsmax and also Sinclair want to challenge Fox News Channel for conservative news viewers.

Politico summed it up by saying,

“Sinclair has been a frequent target for Democrats and liberal groups disturbed by reports that it favors President Donald Trump in its coverage via ‘must-run’ segments pumped to its network of stations.”

During the 2016 presidential election, The Washington Post reported Sinclair

“gave a disproportionate amount of neutral or favorable coverage to Trump during the campaign” while airing negative stories on Hillary Clinton, and Politico reported “on a boast by Trump’s son-in-law Jared Kushner that the president’s campaign had struck a deal with the broadcast group for better media coverage. Sinclair disputed the characterization, saying it was an arrangement for extended sit-down interviews that was offered to both candidates.”

Also, it was Trump who nominated Pai for the agency’s top post, so most experts felt the merger would eventually get the go-ahead due to President Trump’s public comments praising the media company, which boasts a conservative-leaning, anti-mainstream media news operation.

My last post mentioned many different cases of using shell companies under Sinclair’s control to still broadcast on more stations than allowed. Those so-called sidecar arrangements let Sinclair keep a stake in the revenue and programming of the spun-off stations.

I even asked, “Why was the FCC the last to find out? Or did it know and ignore the facts for political reasons?”

Today, I found a new example of a virtual triopoly (three stations in a market), when the FCC only allows duopolies (two stations in a market) and only under certain conditions.

So what changed? Politico reports problems in three cities.

WGN-TV

First, in Chicago, the plan was to sell

“WGN to Steven Fader, a Maryland business associate of Sinclair Executive Chairman David Smith who oversees car dealerships.”

According to Reuters,

“The draft order circulated by Pai’s office … said Sinclair’s actions around the divestiture of TV station WGN in Chicago ‘includes a potential element of misrepresentation or lack of candor.’”

Ouch! Not good for a company licensed to use the public airwaves. I used another example below and then offered a suggestion about what should happen to Sinclair.

Adweek added,

“The FCC feels Smith selling the asset to his friend and business associate presents a problem,”

and I’ll say the price of $60 million is ludicrous, considering the station is worth hundreds of millions of dollars.

According to The Chicago Tribune,

“The WGN services agreement would have kept Sinclair in charge of everything from programming to ad sales while giving it an option to buy back the station for the same price, subject to adjustments, within eight years.”

WPIX

Sinclair was also supposed to sell WPIX-New York, the nation’s largest TV market by far, for a measly $15 million to that same Cunningham Broadcasting, a company with close ties to the Smith family. That caused Pai to say he was concerned Sinclair’s proposed sales in Chicago and New York may have attempted to deceive the government.

Adweek said also troubling

“were the deals to sell stations in Dallas and Houston to Cunningham Broadcasting.”

The Tribune reported,

“The proposal also included an option to buy the stations back.”

According to Reuters,

“Separate filings with the FCC last month by the American Civil Liberties Union and conservative news outlet Newsmax Media” … raised “questions about whether Sinclair would continue to control some of the stations it proposes to divest.”

So Politico said,

“Pai announced an administrative law judge would review the station spinoff issues. The FCC takes that step when companies fail to persuade it that a transaction, even with conditions, would be in the public interest.”

Ars Technica reported the decision by FCC commissioners to adopt a Hearing Designation Order and have a judge review aspects of the deal was unanimous. Other options were

“denying the merger outright, approving the merger, or approving it with conditions.”

Click here for the full order. One of the key parts reads:

“Among these applications were three that, rather than transfer broadcast television licenses in Chicago, Dallas, and Houston directly to Sinclair, proposed to transfer these licenses to other entities. The record raises significant questions as to whether those proposed divestitures were in fact “sham” transactions. By way of example, one application proposed to transfer WGN-TV in Chicago to an individual (Steven Fader) with no prior experience in broadcasting who currently serves as CEO of a company in which Sinclair’s executive chairman has a controlling interest. Moreover, Sinclair would have owned most of WGN-TV’s assets, and pursuant to a number of agreements, would have been responsible for many aspects of the station’s operation. Finally, Fader would have purchased WGN-TV at a price that appeared to be significantly below market value, and Sinclair would have had an option to buy back the station in the future. Such facts raise questions about whether Sinclair was the real party in interest under Commission rules and precedents and attempted to skirt the Commission’s broadcast ownership rules. Although these three applications were withdrawn today, material questions remain because the real party-in-interest issue in this case includes a potential element of misrepresentation or lack of candor that may suggest granting other, related applications by the same party would not be in the public interest.”

This keeps getting better!at&t time warner

Politico said an administrative law judge was called in 2015 with the proposed Comcast-Time Warner Cable deal. The companies later abandoned it, rather than go through the hearing process. AT&T ended up with Time Warner, at least for now, after a federal judge allowed it without conditions, but the Justice Department is appealing.

By last Wednesday, Reuters reported Sinclair announced it would not divest the three TV stations currently owned by Tribune

“to ‘expedite’ the transaction after the FCC suggested the company would still control the stations,” and “two FCC officials who did not wish to be identified said Wednesday they believe the merger will not be able to proceed.”

Instead, Sinclair itself will acquire WGN-Chicago, and put KDAF-Dallas and KIAH-Houston into a divestiture trust and sold by an independent trustee (if the acquisition is finalized).

The Justice Department is also still reviewing the deal and the FCC may have even more concerns.

Sinclair denied any effort to mislead the FCC and issued this long statement:

“While neither Sinclair or Tribune have seen the draft HDO, Chairman Pai’s comments and press reports indicate the FCC is questioning the proposed divestitures in Dallas, Houston and Chicago.  Accordingly, in order to address such concerns and to expedite the Tribune transaction, Sinclair has withdrawn the pending divestitures of stations in Dallas (KDAF) and Houston (KIAH) to Cunningham Broadcasting Corporation and Tribune has withdrawn the pending divestiture of WGN in Chicago to WGN-TV LLC.  Sinclair intends to request permission from the FCC to put the Dallas and Houston stations into a divestiture trust to be operated and sold by an independent trustee following the closing of the Tribune acquisition.  Sinclair expects to have identified and entered into a purchase agreement with a third party buyer or buyers for the Dallas and Houston stations prior to closing.  As a result of the withdrawal of the application relating to WGN, Sinclair will simply acquire that station as part of the Tribune acquisition, which is, and has always been, fully permissible under the national ownership cap.

“Throughout the FCC review process of the Tribune merger and divestitures, Sinclair has had numerous meetings and discussions with the FCC’s Media Bureau to make sure that they were fully aware of the transaction’s structure and basis for complying with FCC rules and meeting public interest obligations. During these discussions and in our filings with the FCC, we have been completely transparent about every aspect of the proposed transaction. We have fully identified who the buyers are and the terms under which stations would be sold to such buyer, including any ongoing relationship we would have with any such stations after the sales. All relevant agreements documenting such terms as required by FCC rules have been filed. While we understand that certain parties, which oppose the transaction object to certain of the buyers based on such buyers’ relationships with Sinclair, at no time have we withheld information or misled the FCC in any manner whatsoever with respect to the relationships or the structure of those relationships proposed as part of the Tribune acquisition. Any suggestion to the contrary is unfounded and without factual basis.

“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.

“There can be no question regarding misrepresentation or character given that Sinclair has fully disclosed all terms of all aspects of the transactions it has proposed. The FCC’s reported concerns with sales to certain parties have been eliminated in light of the withdrawals of the applications relating to Dallas, Houston and Chicago. Accordingly, we call upon the FCC to approve the modified Tribune acquisition in order to bring closure to this extraordinarily drawn-out process and to provide certainty to the thousands of Tribune employees who are looking for closure.”

So what’s next for Tribune? Will it stick by the deal as it said it intends? We don’t know for sure yet, but it has until Aug. 8 and I already mentioned reasons to separate from Sinclair.

This video was made before Cox threw its assets into the ring.

One big winner, so far, could be 21st Century Fox Inc. chairman Rupert Murdoch, who has become close with President Trump.

Bloomberg notes, over the decades, Fox and Sinclair have been in business together, but the conservative organizations have also been rivals.

Sinclair owns dozens of local Fox affiliates. So does Tribune. Last year, Fox tried unsuccessfully to outbid Sinclair for Tribune.

In the meantime, the companies divide the retransmission fees paid by cable and satellite operators (meaning what you and I pay). Networks say local stations have more value because of them.

Former Fox exec Preston Paddon remembers in his blog,

“By 1992, Congress found that cable systems were paying carriage fees to the non-broadcast channels but not to the broadcasters, and that this was unfair to the broadcasters.”

It’s why we pay for free local TV if we’re not watching with an antenna.

Anyway, Sinclair buying Tribune and its own Fox affiliates would’ve given it a stronger negotiating hand in talks with Fox about how to divvy up those fees.

So after losing out on Tribune,

“Fox threatened to pull its affiliates from Sinclair and switch the stations to an independent broadcaster. Eventually, in order to satisfy regulators, Sinclair agreed to sell some Tribune stations to Fox, which, in turn, said it would renew Sinclair’s affiliation with more than two dozen stations.”

Now, Fox may be able to buy even more stations.

And “Sinclair may soon compete with Fox News for right-leaning TV viewers” may not come to pass. It has reportedly been talking about hiring former Fox News stars to create a block of conservative programming using WGN America, which it would acquire, or The Tennis Channel, which it already owns. Former Trump advisor Boris Epshteyn and former CBS correspondent Sharyl Attkisson already work for Sinclair. Politico reported Sinclair has even approached current and former Fox talent such as Jeanine Pirro, and Greta Van Susteren and Eric Bolling. I already wrote Talks with former Fox host Bill O’Reilly fell apart. Sinclair won’t admit to any of that.

Also, the Justice Department appealed the ruling that let AT&T buy Time Warner. That’s good for Fox at the moment because it involves Fox News Channel rival CNN, and may have kept Comcast/NBC from buying most of Fox, as it downsizes to become “New Fox.” Murdoch prefers Disney/ABC buying the assets, which the government already approved, and “the Murdoch family would see more tax benefits in that deal.”

So what’s President Trump’s beef? You already read about his relationship with Sinclair.

Tuesday night, he tweeted it was “sad and unfair that the FCC wouldn’t approve the Sinclair Broadcast merger with Tribune,” but Republicans control the FCC, he appointed Ajit Pai as chairman, and Pai has been accused of being too cozy with Sinclair. But except for appointments, the FCC is independent from the White House.

Deadline reported Sinclair commentator Boris Epshteyn, who used to work for Trump, is for the deal. So is Steve Bannon, who got friendly with Sinclair stations in swing states before the election. And Trump has to like Sinclair’s publicity.

The only Democratic FCC commissioner at the moment tweeted her response to the president with just one word: disagree.

But Trump’s friend Rupert Murdoch – who also owns TV stations and the pro-Trump Fox News Channel – is said to be against the merger. That would be especially so if Sinclair starts putting conservative news on cable through WGN America and The Tennis Channel. Trump is so chummy with Murdoch, he called in December to congratulate him on the Disney-21st Century Fox deal.

I wrote another friend, NewsMax chief Chris Ruddy, is definitely against Sinclair-Tribune, as well.

Furthermore, the president compared Sinclair-Tribune to letting “Liberal Fake News NBC and Comcast (get) approved” which happened under the Obama administration and FCC. Trump criticized it as being too big.

He didn’t mention it’s on the level of AT&T-Time Warner, which a federal judge recently allowed but the Justice Department is appealing.

The difference between Sinclair-Tribune and Disney-Fox – and NBC-Comcast and AT&T-Time Warner – is that the first pair involve companies that make content but don’t distribute it. In the second pair, NBC and Time-Warner make content, but Comcast and AT&T actually distribute it — Comcast through cable and AT&T by DirecTV satellite, both of which are paid subscription services.

In April, Axios reported President Trump defended Sinclair after the company started

“forcing conservative, pro-Trump editorials on its” news anchors and “Deadspin created a video of Sinclair broadcasters spurning ‘fake news.’

Viewers of Sinclair’s 200-plus local stations had already seen “centrally drafted opinion items reflecting its conservative, often pro-Trump positions,” but not by their own local anchors and certainly not side-by-side along with so many others.

That was at 6:34am. Keep in mind, a great number of Sinclair’s stations are affiliated with the networks.

Then, at 6:58, Trump took on CNN…

and got pushback from its PR department.

CNN reports some Sinclair journalists said they were unhappy with President Trump’s portrayal of the company as “conservative” because they want to be recognized for their straight-forward, nonpartisan work. Despite their stations being forced to air pro-Trump commentaries and stories, most journalists at local stations don’t want to be labeled by the president or anyone else.

As for Sinclair’s claim of more localism if the deal goes through, FTVLive’s Scott Jones found Sinclair station WSYX-Columbus, Ohio, doing a series of reports called “Gator Week” (as opposed to Shark Week, that has been on the Discovery Channel since 1988). Still, Jones thought it was “odd” considering “you don’t see many alligators in Ohio.” Then, he found out about other Sinclair stations doing the same thing, “including WGXA (Macon, Ga.), WPMI (Mobile, Ala.), WPEC (West Palm Beach) and others.” He joked he wasn’t sure it was a must-run.

I, myself, found Shark Week on a retweet from the Cunningham Broadcasting station in mid-Michigan. Maybe WBSF was allowed to go a different route.

WBSF’s “About” section says it’s “owned and operated by Cunningham Broadcasting Corporation and receives certain services from an affiliation of Sinclair Broadcast Group.” So there are three terms/phrases: owned, operated, and “receives certain services from an affiliation of Sinclair Broadcast Group.” Maybe that’s because just above, it says to send all press releases to news@nbc25news.com. So maybe “certain services from an affiliation of Sinclair Broadcast Group” includes press releases.

But wait!

Below, there are nbc25news email addresses for comments, webmaster (the Sinclair owned, operated, and apparently “affiliated” websites all look similar), contests and weather.

And below that are Sinclair (sbgi.net) email addresses for corporate, two for national advertising, and the secondary person for closed-captioning concerns.

So maybe those are all the “certain services from an affiliation of Sinclair Broadcast Group.”

That’s all very interesting since I knew Sinclair controlled two other stations in the same location!

NBC affiliate WEYI has on its “about” section (with the same look) that it’s “owned and operated by Howard Stirk Holdings, LLC and receives certain services from an affiliation of Sinclair Broadcast Group.” That entire phrase is merely a substitution for Armstrong Williams’ company and we established in my last post that WEYI is one of a few Howard Stirk stations run by Sinclair. They also use the nbc25news email, but it’s more appropriate here.

Then there’s Fox affiliate WSMH that has on its “about” section (with the same look, of course) that it’s – wait for this! – actually “owned and operated by Sinclair Broadcast Group.” The email addresses are all wsmh.com. The “receives certain services” phrase is not there.

I did notice after the paragraph with the name of the owner, etc., and ties to Sinclair, is another called “Community Involvement.”

What’s funny is that all three stations start with “The owner and Sinclair Broadcast Group, LLC. continue to broaden its recruiting outreach…”

That means “the owner” can be whichever company actually holds the station license and it’s not named here, just referred to as “the owner,” out of laziness.

But what’s especially funny here is saying “The owner and Sinclair Broadcast Group” when Sinclair is really the owner!

But seriously, how does Sinclair operate the three stations with the same address, etc.? We learned in my last post that’s not allowed in Baltimore, with Sinclair, Cunningham and Deerfield Media. In fact, in Nov., 2012, TVNewsCheck reported the situation as “a virtual triopoly.”

The FCC’s webpage called Broadcast Ownership Rules clearly states in its section, Local TV Multiple Ownership:

“An entity is permitted to own up to two TV stations in the same Designated Market Area if either:

  • “The service areas – known as the digital noise limited service contour – of the stations do not overlap

  • “At least one of the stations is not ranked among the top four stations in the DMA (based on audience share), and at least eight independently owned TV stations would remain in the market after the proposed combination”

That’s the summary in its entirety! The stations cover the same area. An old website reports “eight full-power television stations in the Flint-Saginaw-Bay City market,” the others being CBS and ABC affiliates, two PBS affiliates and a religious broadcaster.

And the NBC, Fox and CW stations are controlled by the same company, for all intents and purposes. I’d bet the CW station is not in the top four rated, but the rules are for an entity “to own up to two TV stations” – just two!

(The MyNetworkTV affiliate is on a sub-channel of the CBS affiliate.)

I just found the mid-Michigan situation by accident and wonder how many other cities this has been going on in.

TVNewsCheck’s Harry A. Jessell put it this way, and then made lists of winners and losers at this point:

“Its mishandling of its merger application has badly stained its permanent FCC record in a way that could greatly complicate its future regulatory dealings. … And a liar is what the FCC has accused Sinclair of being by obfuscating the fact it would continue to control three major market stations that it told the FCC it would spin off to other broadcasters to comply with ownership limits.

“You see, the FCC acts on the honor system. It presumes that you are obeying all the rules and expects you to confess any infractions. It’s the principal way the FCC polices those it regulates. That’s why lying – the ever-polite FCC calls it “misrepresentation” or “lack of candor” – is taken seriously and is the FCC equivalent of a capital crime. … As the lawyers pointed out to me this week, once indicted for misrepresentation as Sinclair has now been, it sticks because it goes to the broadcaster’s basic character qualifications to be a licensee. It cannot buy or sell a station or even renew a license until it resolves the character question. Sinclair’s best move now is to walk away from the merger and promise, no, swear on a stack of Bibles, that it will never, ever mislead the FCC again.

“Sinclair has no one but itself to blame for this fiasco. It pushed too hard to keep as many of the Tribune stations as it could and somewhere along the line lost sight of the larger goal – get the transfer through the FCC and get to closing. … (David Smith) kept going back to the FCC (and the Justice Department) demanding more and more. Ironically, he will likely end up with nothing, except maybe a new set of regulatory hassles.”

Bloomberg quotes B. Riley FBR Inc. analyst Barton Crockett, who said in a note he has

“never seen such ‘harsh’ language from the FCC about an applicant for a merger. The ‘vitriolic’ tone of the FCC statement makes it dubious that Sinclair and Tribune will be able to come back with divestitures that will satisfy the FCC.”

Bottom line: Anyone who knows me knows I can be tough, especially on myself. The people who run and invest in the nation’s largest media company have been breaking rules all over the place for many years. It’s time the FCC gets extremely serious so it’s taken seriously when protecting the public interest from those using the public airwaves.

Does anyone remember the RKO situation? Have a seat and look for similarities. (I wrote this with information from several Wikipedia listings.)

RKO General 1962
1962 logo

RKO General was the main holding company through 1991 for the non-core businesses of the General Tire and Rubber Company.

It had been in broadcasting since 1943, and General Tire bought the RKO Radio Pictures movie studio in 1955, but dissolved it in 1959. From then until 1991, it operated six TV stations and more than a dozen radio stations. It also holds the record for the longest licensing dispute in television history.

KHJThe trouble began in 1965. RKO General applied for license renewal of KHJ-TV in Los Angeles (now KCAL-Channel 9). A local group, Fidelity Television, challenged it, charging RKO with second-rate programming, and later and more seriously, that General Tire conditioned its dealings with certain vendors on the basis they’d buy advertising time on RKO General stations. These “reciprocal trade practices” are considered anti-competitive. RKO and General Tire executives testified before the FCC and rejected the accusations. Four years later, in 1969, the commission issued an initial finding that Fidelity’s claims were correct.WNAC RKO

That same year, RKO faced a license challenge for WNAC-TV in Boston (now WHDH-Channel 7, not to be confused with the old WHDH-Channel 5), again charged with reciprocal trade practices.

WOR RKOFour years later, in 1973, the FCC ruled in favor of RKO in the Los Angeles case, pending findings in the still-ongoing Boston investigation. The next year, in 1974, when RKO applied for license renewal of WOR-TV in New York (now WWOR-Channel 9, technically Secaucus, NJ), the FCC conditioned the renewal on the Boston case as well.

SIDEBAR: Another Boston FCC case lasted 15 years – not the record, but from sign-on to sign-off – and involved the former WHDH-Channel 5. The DuMont Television Network applied for a construction permit for the channel, but shut down its network before getting it. The Boston Herald Traveler Corporation got the license, signed on in 1957, and shortly after, the FCC started investigating allegations of impropriety in the granting of the television license. (Allegedly, the controversy was over luncheon meetings the newspaper’s chief executive had with an FCC commissioner during the original licensing process.) So the old channel 5 (WHDH) never had a license longer than six months at a time while the standard was three years.

Eventually, the FCC ordered comparative hearings and in 1969, a local group called Boston Broadcasters was granted a construction permit for a new station on channel 5 called WCVB after it promised to air more local programming than any other station in America at the time. That’s even though the old channel 5 (WHDH) often broadcast more local programming than any other commercial TV station in Boston. Herald-Traveler Corporation lost its court case in 1972 and WCVB went on the air in its place. Luckily, everyone on the old channel 5 moved to the new channel 5 which still broadcasts from the suburb of Needham, since the old WHDH-TV refused to sell its studios, transmitter and tower to the new WCVB, which is now owned by Hearst.

NOW BACK TO THE STORY: In June, 1974, an administrative law judge renewed the WNAC-Channel 7 Boston license even after finding General Tire and RKO General had engaged in reciprocal trade practices. In December, 1975, a company competing for the license called Community Broadcasting asked the FCC to revisit the case. It alleged General Tire bribed foreign officials, maintained a slush fund for U.S. political campaign contributions, and misappropriated revenue from overseas operations. RKO denied all the allegations during a year-and-a-half series of proceedings. Then, in July, 1977, General Tire admitted to an eye-popping litany of corporate misconduct, including the bribery and slush fund charges, in order to settle an action brought by the Securities and Exchange Commission. But the TV situation wasn’t over yet. Still, the RKO proceedings dragged on!

Finally, in 1980, after a half-decade of hearings and investigations, the FCC stripped RKO of WNAC’s license. It found RKO “lacked the requisite character” to be the station’s licensee and gave as examples, the reciprocal trade practices of the 1960s, false financial filings by RKO, and General Tire’s gross misconduct in non-broadcast fields.

But the worst was RKO’s dishonesty before the FCC. During hearings, RKO withheld evidence of General Tire’s misconduct, including the fact the SEC had been investigating the company in 1976. RKO also denied it had improperly reported exchanges of broadcast time for various services, despite indications to the contrary in General Tire’s 1976 annual report. So the FCC found RKO had displayed a “persistent lack of candor” over its own and General Tire’s misdeeds, which threatened “the integrity of the Commission’s processes.” That FCC ruling meant RKO lost the KHJ-TV Los Angeles and WOR-TV New York licenses as well.

RKO appealed to the District of Columbia U.S. Court of Appeals, which upheld the revocation solely on the basis of RKO’s lack of candor. It wrote in its opinion, “[t]he record presented to this court shows irrefutably that the licensee was playing the dodger to serious charges involving it and its parent company.” But the court interpreted the candor issue so narrowly that it applied only to WNAC-TV, and ordered rehearings for WOR and KHJ. RKO General appealed again, this time to the U.S. Supreme Court. In 1982, SCOTUS refused to review the license revocation, and it was over. RKO General sold WNAC’s assets to New England Television (NETV), a new company from the merger of Community Broadcasting and another competitor for the license, the Dudley Station Corporation. The FCC granted a full license to NETV on channel 7, which it renamed WNEV-TV. Since then, the station changed its call letters to WHDH-TV, had low ratings, and was sold to Ed Ansin’s Sunbeam Television Corporation. (This WHDH has no relation to the old WHDH-Channel 5.)

It could’ve been worse. In 1983, the FCC began taking competing applications for all of RKO’s broadcasting licenses, but Congress passed a law sponsored by Sen. Bill Bradley requiring the commission to automatically renew the license of any commercial VHF-TV station relocating to a state without one, meaning New Jersey and Delaware. Two months later, RKO General officially changed WOR’s city of license from New York to Secaucus, NJ, where it remains on paper. The FCC made the station move its main studio there and step up coverage of events in the Garden State. Still, WOR maintained its identity as a New York station. (It’s now owned by Fox, which also owns WNYW-Channel 5, and got rid of channel 9’s newscasts.)

In 1984, RKO sold its Radio Networks operation to United Stations. In 1986, under pressure, RKO put WOR up for sale. MCA/Universal won the bidding war and the FCC approved the purchase. In 1987, MCA changed the call letters to WWOR. (Remember the slogan Universal 9, about 15 years before NBCUniversal was formed?)

RKO was lucky it sold WOR. In 1987, an FCC administrative law judge found it unfit to be a broadcast licensee due to a long history of deceptive practices he called the worst case of dishonesty in FCC history, and ordered RKO to surrender the licenses for its two remaining two TV stations and 12 remaining radio stations. RKO declared all of the employees responsible for the misconduct had been fired and appealed, claiming the ruling was deeply flawed. But the FCC made it clear it would probably reject any appeals and strip the licenses, and urged RKO to sell everything before that became necessary.

In 1988, under an FCC-supervised deal, the license of KHJ-Los Angeles was granted to Fidelity, the company that had originally challenged RKO General. Fidelity then transferred it to Disney, before it bought ABC, for $324 million. RKO got about two-thirds and Fidelity got the rest. By 1991, everything was sold. (Fort Lauderdale-Miami’s WAXY-FM 105.9 – which labeled itself “an RKO radio station” before giving its call letters, near the end – was sold in 1990. That was 28 years ago! Unbelievable!)

TVNewsCheck’s Harry Jessell put it this way:

“When people are making comparisons between your station group and RKO General, you know you have screwed up.”

I think there are too many changes going on in the industry right now as technology improves so quickly. Jessell mentioned certain former FCC commissioners would’ve gone the RKO route with Sinclair. I agree because now more than ever, broadcasters use the public airwaves and must pay us back with public service under tougher rules than its competitors. And the FCC needs complete and total honesty, with so much on its hands.

Sinclair needs to be brought down similarly for all it has done, with the same family as owners and no concern for anything but profit over the decades. The stations should be separated. Local broadcasters or broadcasting groups with no other industry interests should be given first shot at the stations. Then, they can hire experienced people with original ideas, and decisions would be made right there in the studio building.

Please leave your comments in the section below, and don’t miss out. If you like what you read here, subscribe to CohenConnect.com with either your email address or WordPress account, and get a notice whenever I publish. I’m also available for writing/web contract work.

Ready to ‘X out’ Comcast Xfinity from my life

I DECIDED TO STAY WITH COMCAST. Yes, you read correctly. I made the decision yesterday after coming ‘thisclose’ to switching to Verizon.

This is the reason and in no way do I take back anything I said previously (below) about Comcast. I simply used my head instead of my heart, and took the better deal.

Comcast logo sized

Everyone’s decision is different – I’ll share my parents’ – but I live in a Philadelphia high-rise. Comcast is by far the easiest company to use in my building. I’ve asked the management to ask the board to look into competition and a group deal. (More on the group deal in just a moment.) Fios isn’t offered here and satellite dishes have been ruled legal, but I face the north side and am closer to the bottom of the building than the top.

I was able to overcome both of those obstacles back in South Beach and loved having DirecTV. Then at Riverwood, also in Miami, the condo management had negotiated deals with Comcast for basic cable that were part of our maintenance fees. Anybody could pay more for extras. I wish we had a similar system here for hundreds of units (twice the number there) that would also include basic internet.

I really looked into Verizon, which I use for my cell phone, and had a nice online chat about a mobile Wi-Fi hotspot. Buying the device would clear up the need for the internet – however, I went to the store and they were honest. The device would use data. The amount of data would depend on how much I use it, and I have the perfect amount for right now. I come very close to the limit but don’t exceed it. On the chat, I was told I could pay $20 more every month for unlimited data, but found out that wasn’t true when they checked at the store. Instead, they’d have to start the bill from scratch and I’d pay $40 more every month. Also, the speed would be much less than Comcast’s offer.

Comcast started as usual, a pain in the ass.

You’ll remember, or see just below, on Thursday, I threatened them and told them to look at this blog post that the world can see.

On Friday, I tried to call but they had their outage. After not getting through twice, I talked to a computer that told me my wait should be less than five minutes. I hung up after listening to oldies for an hour-and-a-half.

I would not do frustrating work with Comcast over the weekend, knowing my point was made on the blog, out there and even updated from the original.

Monday, we had a l-o-n-g series of Twitter direct messages.

They asked for my name and phone number. Then they told me the phone number “provided pulls up more than one account” and asked for my address. I gave it to them and told them to lose the two former addresses where I used Comcast, because those accounts have been closed for so long.

I’d been told specifically to ask for the loyalty team but got the social media corporate team. I insisted they read the blog because “I’m not repeating anything. I wasted enough time chatting & waiting to talk to Comcast people,” and I was in a rush. They didn’t know part of that rush was to get to the Verizon store, so they’d better be quick.

After a little more back-and-forth, and mentioning a similar increase for my parents, I was at the bookstore.

This is what Comcast offered:

2018-07 comcast offer

Note the price went down by $20 from the original, but they didn’t give an exact total including taxes and fees. Eventually they did, and it was just $30 more than I was paying, better internet speed, and a DVR that would let me stream programming anywhere (once I learn how that works because I may have had the DVR before and never used it). I haven’t noticed any change in channels.

But I was unfamiliar with the approval form and away from home, using only my phone.

Eventually, I made it from the bookstore to the Verizon store and as I explained, they were honest that they couldn’t offer a better deal without Fios.

I have a digital antenna and can see all the local stations and subchannels for free.

I could’ve bought two more digital antennas since I have three TVs, but would’ve still needed the internet, as I explained. I already had a device that’s supposed to act as a mobile DVR that comes with a place to insert Roku or anything else.

But it’s also summer, when the networks are into reruns and a lot of nonsense, so I figured it would be less expensive and easier to stick with cable instead of making multiple changes I couldn’t be sure about. Potentially losing the news channels didn’t play much of a role, since I can read and stream the news, and I’m not planning on getting back into what so much TV “journalism” has become.

So that’s my story. Yesterday, Comcast ended up being very, very nice – and the better deal.

As for my parents in Florida, they got a similar Comcast increase for cable and the internet, but somehow their new bill was $100 more than mine!

I suggested since they have AT&T for their home phone (but are on my Verizon cell phone plan), they should consider switching to AT&T for the internet, which I had in Florida, and AT&T-owned DirecTV, which I really liked many years back when it was under different ownership.

That would make three different AT&T products for them and probably cost a lot less money. I hope they’ll be tough with Comcast and lucky with AT&T.

FRIDAY UPDATE:

 

ORIGINAL FROM THURSDAY:

I don’t know how many of you still have cable TV or satellite these days. It seems everyone is a cord-cutter.

Looks like I’m about to join the crowd, and would appreciate your experiences and suggestions.

I have basic cable and internet. Nothing special. The fees have been going up, little by little for the past year.

 

Comcast logo sized

Last month, I paid $131.54. This month’s bill came today and Comcast suddenly wants $185.09!

Mark my words: That will not continue. In fact, if I pay that one time, all the regulators will hear from me. Has anybody ever seen me bluff?

You’ll understand a lot more when you read the “chat” Glenjoe and I spent an hour preparing for you to read!

Then, my plan was that when I was done publishing, I’d call the Comcast Loyalty Team. That way, they could read this, instead of me having to explain everything all over again, so I can eat. But I had to be done by 9! Didn’t happen. Not even close. So tomorrow.

And why should I have to call? Doesn’t Comcast offer phone service?

Plus, how will they react after this story titled “Consumer Reports’ ‘What the Fee’ campaign targets Comcast for its TV, sports fees” in the Philadelphia Inquirer, posted online yesterday afternoon?

inky comcast

Keep reading. This is the transcript. Enjoy the back-and-forth more than I did!

x1

x2

comcast correction

x3

x4

x5

 

 

Meanwhile, I’m glad I got a phone number because these two similar promotions of many I’ve gotten and saved over the past few months have different phone numbers. I wonder if they offer different prices.

2 phone numbers

Then, of course, is the point of the Inky article: the fees. Yes, there are taxes and franchise fees, but I’m going to focus on cable and satellite companies paying retransmission fees to the broadcast TV stations they carry because they’re more my expertise. Those are the stations we could get for free by antenna, if we chose to.

This is that part of my bill Philadelphia customers get.

broadcasting sports fees

Notice Comcast charges me $7.50 every month for TV stations and $6.75 as a regional sports fee.

Don’t forget we’re talking about the conglomerate Comcast. They own a lot.

First, I’m very, very angry those broadcast TV fees don’t go directly to the area TV stations for what was negotiated (forced on Comcast so we, the customers, pay for something we could get for free).

WCAU WWSI WPVI
Logos from https://www.nbcphiladelphia.com/https://www.telemundo62.com/ and http://6abc.com/ courtesy Wikipedia

Second, Comcast owns WCAU-NBC 10 and WWSI-Telemundo 62 here in Philadelphia. I’d also be very, very angry if those broadcast TV fees are not in line with those TV stations’ ratings. NBC 10 may be a very distant second place to WPVI-6 ABC, so I’d think NBC 10 should get a very distant second amount, compared to 6 ABC. Isn’t that similar to the cost advertisers pay, but advertisers pay by program? And NBC 10 could promote Telemundo 62 all it wants but that doesn’t mean many people watch. Its retransmission fee should be relatively tiny. I’d love to know how much each station makes. They are federally licensed and regulated, so I suppose it’s possible.

One thing is for sure and that’s that Comcast-owned TV stations had better not be making more money than they deserve, compared to the competition. Otherwise, it may be a violation of a condition it agreed to when it bought NBC Universal.

NBC Sports Philadelphia
https://www.nbcsports.com/philadelphia/

And as far as the regional sports fee goes, is there any other than NBC Sports Philadelphia, formerly Comcast SportsNet? Yes, they pay to show Phillies games, which used to be free, over the air, before retransmission fees had been invented. Apparently that one cable station I hardly ever watch doesn’t get the whole pot of $6.75!

I know because on our bills, and between pages 3 and 4 of the transcript, it says both regional sports and broadcast TV fees only “recovers a portion” of the costs. So what happens to the rest? All customers should be angry!

(And speaking of sports, the NFL Network is not regional, so the April article in the Inky, “Comcast bumps NFL Network up a tier, adding $10 for the network,” is a separate fee for subscribers who want that particular channel.)

Anyway, it’s now well after 10pm. I spent that last 30 minutes with a computer that keeps freezing. I’m hungry, but I can’t wait to talk to somebody in Comcast’s Loyalty Team tomorrow. I’ll have that lucky person read this first.

On the other hand, your best advice on cutting the cord would be very appreciated below in the comments section.

Thanks to you, and of course Philadelphia-based Comcast. Yes, it’s a hometown company!

comcast santa

And please, don’t miss out. If you like what you read here, subscribe to CohenConnect.com with either your email address or WordPress account, and get a notice whenever I publish. I’m also available for writing/web contract work.

The Weather Channel’s new owner, a real controversial person

There are two big changes in weather: The snow has stopped and The Weather Channel is being sold.weather channel logo

Also, you can say the owner is a real person for two more reasons: The new owner is not a partnership between three corporations, like in the past – and he was one of the stars of the TV show Real People!

Deadline magazine reports Byron Allen bought the Weather Group, parent company of The Weather Channel TV network, for about $300 million. His wholly-owned Entertainment Studios paid a lot less than the $3.5 billion the owners spent for the company in 2008. IBM bought The Weather Company’s digital Product and Technology Businesses – WSI, Weather.com, Weather Underground and The Weather Company brand – in 2015.

Entertainment Studios logo

The Weather Channel and Local Now streaming service had been owned by The Blackstone Group, Bain Capital and Comcast/NBCUniversal. Deadline pointed out those groups “experimented with longer-form programming and big-name talent” such as Al Roker and Sam Champion.

It also said Allen, “comedian-turned-entrepreneur, has been growing his Entertainment Studios, which became the largest independent producer of first-run syndicated programming.”

byron allen
http://www.es.tv/trending-funny/

Allen has also been busy in court. In April 2017, a federal judge denied Charter Communications’ Motion to Dismiss his $10 billion lawsuit for racial discrimination in contracting.

Allen said at the time,

“This lawsuit was filed to provide distribution and real economic inclusion for 100% African American-owned media. The cable industry spends $70 billion a year licensing cable networks and 100% African American-owned media receives ZERO. This is completely unacceptable. We will not stop until we achieve real economic inclusion for 100% African American-owned media.”

Allen had also sued Comcast, Time Warner Cable and Rev. Al Sharpton for $20 billion, claiming “black media companies receive a small share of the annual spending on cable licensing.”

He claimed,

“The industry spends about $50 billion a year licensing cable networks in which 100 percent African American-owned media receives less than $3 million per year in revenue from that $50 billion stream of money that is spent to acquire content.”

comcast new 595x227

Allen also accused media companies of adding insult to injury by throwing money at Sharpton, employed by Comcast-owned MSNBC – saying they used “the least expensive negro” to “cover” up their track record of “blatant” discrimination.

On top of that, Allen called President Obama “bought and paid for” by Comcast.

“What happened in the Obama administration is former (FCC) commissioner Meredith Attwell Baker voted for the merger of Comcast NBCU and then 90 days later took a much higher paying job with Comcast after granting them the merger,” Allen said. “That was betraying the public’s trust as a public service.”

As of April 2017, that suit was pending. At least part of it had been dismissed, but Allen was appealing. I could not find anything on Entertainment Studios’ website while searching for Comcast, Warner, Time-Warner, or Sharpton.

Byron Allen: Black people are doing worse under President Obama.

Byron Allen standing by his controversial comments.

But he sued AT&T and forced the company’s subsidiary DirecTV to pick up seven Entertainment Studios Networks channels.

Real People cast
Did you watch NBC, Wednesdays 8-9pm, 1979-84? Top: John Barbour, Sarah Purcell, Skip Stephenson, Byron Allen; Bottom: Bill Rafferty

Looks like Allen has turned out to be the most successful of the Real People cast!

A look back at Real People:

Byron Allen heads to cheerleading school:

Byron Allen visits a bar on Venice Beach where disco on skates is king:

Byron Allen visits the experimental aircraft convention and talks to vets:

The syndicated Byron Allen Show, 1989-92.

We may have learned the fates of seven TV stations that will be divested if the $3.9 billion Sinclair-Tribune merger I’ve written against time and time again is allowed to happen.

Apparently, they won’t be going far – just to Armstrong Williams.

armstrong williams
http://www.armstrongwilliams.com/

Wikipedia calls him “an American political commentator, entrepreneur, author of a nationally syndicated conservative newspaper column, and host of a daily radio show and a nationally syndicated TV program called The Armstrong Williams Show.” The South Carolina native is also the largest African-American owner of television stations in the U.S.

I also can’t leave out the unbelievable: He served as “legislative aide and advisor to Sen. Strom Thurmond.” Yes, the same Strom Thurmond who The New York Times remembered ran

“for president in 1948 as what the press called a Dixiecrat.” …

“He said that ‘on the question of social intermingling of the races, our people draw the line.’ And, he went on, ‘all the laws of Washington and all the bayonets of the Army cannot force the Negro into our homes, into our schools, our churches and our places of recreation and amusement.’

“His opposition to integration, which he often attributed to Communism, was the hallmark of his career in Washington until the 1970’s. In 1971, he was among the first Southern senators to hire a black aide — in recognition of increased black voting resulting from the legislation he had fought. From then on, black South Carolinians, like all other residents, benefited from his skills as a pork-barrel politician who took care of the home folks.

“‘We’ve looked out for the state,’ he said in a 1999 interview, ‘and everything that was honorable to get, we got it.’”

strom thurmond
via U.S. Senate Historical Office

According to a Senate website, “He turned 100 years old in 2002, becoming the oldest person ever to serve as a senator. He also holds the Senate’s record for the longest individual speech, his filibuster against the 1957 Civil Rights Act.” He retired Jan. 3, 2003, and died that June.

According to The Times, “Mr. Thurmond always insisted he had never been a racist, but was merely opposed to excessive federal authority.”

So that was Armstrong Williams’ boss at one point. Wikipedia adds,

“He is principal in Howard Stirk Holdings, a media company affiliated with Sinclair Broadcasting that has made numerous television station purchases.”

The name of the company came from both William’s mother’s middle name, Howard, and his father’s middle name, Stirk.

On President Trump’s “s__thole countries” comment: “An indictment about what’s in his heart.”

African-American conservative and South Carolina native talks about removing the Confederate flag.

Sinclair has been known for using shell corporations like Cunningham Broadcasting to own stations while Sinclair actually operates them, including programming them and doing everything else true owners would do, as an attempt to get by the rules.

Williams has been in business with Sinclair – a corporation with overtly and pushy conservative leanings – before.

Armstrong Williams on President Obama’s “arrogant and dictatorial style.”

The backstory is that Williams helped Sinclair buy Barrington Broadcasting. He got NBC affiliate WEYI-TV in Flint-Saginaw-Bay City, Mich., and CW affiliate WWMB in Myrtle Beach-Florence, S.C., BUT according to Wikipedia,

“Both stations remain operated by Sinclair under a local marketing agreement, which resulted in allegations that the company was simply acting as a ‘sidecar’ of Sinclair to skirt FCC ownership rules. Williams defended the allegations, noting that he had full control over their programming, and received the majority of their revenue.”

He did buy five other stations, three from Sinclair.

Williams’ website has the headline “Howard Stirk Holdings seeks to acquire 7 local affiliates in early 2018!” (really in six cities) and a picture with logos, but no article. At least it says “seeks.”

new HOWARD STIRK

I found connections to the Sinclair-Tribune deal in all the stations pictured, with just a question about one.

Let’s take a look at the stations (clockwise on above graphic):

* Sinclair’s WLRH-35 in Richmond, Va. (Fox affiliate with CW on subchannel), since Tribune owns competitor WTVR-6 (CBS affiliate).

map Harrisburg Indy Greensboro

* North Carolina’s Triad (Greensboro, Winston-Salem, High Point) is where I have my big question. Sinclair owns WXLV-45 (ABC affiliate) and also WMYV-48 (MyNetworkTV affiliate). Tribune owns WGHP-8 (Fox affiliate). I would expect one of those three to go, but the logo on Armstrong Williams’ website is for WCWG-20 (CW affiliate). Just last month, Hearst bought that station from Lockwood Broadcast Group, but it had already been operating the station under a shared services agreement. Hearst also owns the market’s NBC affiliate, WXII-12, making a duopoly. How any other owner would fit in, since Hearst just finished the sale and got a duopoly last month, is a mystery to me – unless The CW plans to change its affiliated station in the market. Note the station already has a good owner that puts a newscast on it, but nothing – not even public service — compares to money when it comes to broadcasting. (Also keep in mind, a month ago, Sinclair made a case to the FCC it should be able to own more than one of the top four stations in Harrisburg, Indianapolis and Greensboro, N.C.)

kdnl people* Sinclair’s KDNL-30 in St. Louis. This weak ABC affiliate with lousy ratings canceled its local news in 2001. From 2011 to 2014, a competitor aired news for it at 5 and 10:00. Then came a year with Family Feud and Who Wants to Be a Millionaire instead of news. Since 2015, it has been airing The Allman Report, which says it has a “debate-driven format,” at 5 and 10pm, and 6:30am. But what about news? Click here for the station’s website’s People page. Notice it’s empty! Tribune owns two competitors in St. Louis: KTVI-2 (Fox affiliate) and KPLR-11 (CW affiliate). Sinclair filed to own two stations in this market. The St. Louis situation could come down to which stations are and are not part of the top four rated in the city, per FCC rules. Read below for details.

* Tribune’s KZJO-22 in Seattle (MyNetworkTV affiliate), since Tribune also owns KCPQ-13 (Fox affiliate that Fox itself really wants to buy), and Sinclair owns both KOMO-4 (ABC affiliate) and KUNS-TV51 (Univision affiliate) there.

* Sinclair’s KOKH-25 (Fox affiliate) and KOCB-34 (CW affiliate) in Oklahoma City. Tribune owns both KFOR-4 (NBC affiliate) and KAUT-43 (independent) there.

* Dreamcatcher Broadcasting’s WGNT-27 (CW affiliate) in Norfolk, Va., which is operated by Tribune, while Tribune also owns WTKR-3 (CBS affiliate) there. Sinclair owns WTVZ-33 (MyNetworkTV affiliate) in Norfolk.

sinclair before tribune
Sinclair currently, without Tribune, from http://sbgi.net/tv-stations/

No price has been announced, but it was reported a few weeks ago Sinclair will sell WPIX-New York for a measly $15 million to Cunningham Broadcasting, owned by Sinclair’s founder’s survivors, and WGN-TV Chicago for just $60 million to Steven B. Fader, chairman of Baltimore-based Atlantic Capital Group and business partner of Sinclair executive chairman David Smith in Atlantic Automotive Corp.

That’s peanuts. Pennies on the dollar. No stations above even come close to WPIX-New York or WGN-TV Chicago, each worth hundreds of millions of dollars, maybe a half-billion. But Sinclair will get to run them and possibly buy them back within eight years, if the rules are relaxed further by then.

Both Sinclair and Tribune own many TV stations. You just got a taste of how each company by itself owns several stations in several cities, and that number grows very large – too large for federal regulations – if combined. That means some stations will have to be spun off.

As I’ve written, Fox has wanted to buy several of those stations, especially Fox affiliates in cities with NFL football teams. Both Sinclair and Tribune own several Fox affiliates.

map seattle sacramento san diego salt lake city denver clevelend miami

According to Deadline magazine last month,

“Fox is in talks to acquire at least six stations from Sinclair, a source confirms. Discussions center Tribune-owned Fox affiliates in five markets — Seattle (KCPQ), Denver (KDVR), Salt Lake City (KSTU), Sacramento (KTXL) and Cleveland (WJW) — and a CW affiliate in greater Miami (WSFL) … contingent upon Sinclair winning regulatory approval for its $3.9 billion Tribune acquisition.”

Whether Fox will get to buy those stations remains to be seen. That’s because:

— Sinclair is already the nation’s largest TV station owner, based on the number of Americans its stations reach. That’s how the count goes, and Sinclair wants as many different people watching its stations – or able to pick them up – as possible. It probably won’t sell more than what’s necessary.

— Of course, it helps to own more than one station in a city, since synergies can save millions of dollars. As a small example, the company will only need one person to answer the phone. Both companies have pushed the legal limit on duopolies, and Sinclair has already asked for waivers. Again, it probably won’t sell more than what’s necessary.

— Fox will need money to buy all those stations, and it planned to sell its film, television, 22 regional sports networks and international businesses to Disney for $52.4 billion – but that plan is no longer certain.

There could be two stumbling blocks for Fox to sell everything but its broadcast network, TV stations, news and business channels, and its FS1/FS2 cable channels.

Reuters reported a group called Protect Democracy Project sued in District Court in Washington for any records of communications on the deal between the White House and the Justice Department, plus “any related antitrust enforcement efforts by the DOJ, to find out whether the president or his administration is improperly interfering with the independence of the DOJ out of favoritism for a political ally.”

According to White House Press Secretary Sarah Sanders, President Trump attacked AT&T’s $85.4 billion bid for Time Warner. However, he even spoke to Fox owner Rupert Murdoch in December and congratulated him on his Disney deal!

at&t time warner

Fox owns Fox News Channel, which Trump likes, and Time-Warner owns CNN, which the president does not like.

The other problem with the Fox-Disney deal is that it included Fox’s stake in Sky Plc, over in the U.K. The Sporting News called the British satellite broadcaster “one of the most attractive and important assets in the Disney-Fox deal.”

sky news logo

Fox owns 39 percent of it and “has been in a more than year-long fight with regulators in the U.K. to … buy out the remaining 61%” for $15 billion but late last month, Comcast outbid Fox, offering $31 billion for Sky. That’s 16 percent more.

comcast
March 7

Funny thing is, Comcast had originally even offered more than Disney for all those Fox assets but was rejected!

But let’s be clear on Federal Communications Commission rules on broadcast ownership limits.

fcc logo

It says the FCC

“sets limits on the number of broadcast stations – radio and TV – an entity can own, as well as limits on the common ownership of broadcast stations and newspapers. As required by Congress, the FCC reviews its media ownership rules every four years to determine whether the rules are in the public interest and to repeal or modify any regulation it determines does not meet this criteria.”

*Newspaper and Broadcast Station Cross-Ownership: No “common ownership of a full-power broadcast station and daily newspaper if” the station completely encompasses the newspaper’s city of publication, and they’re in the same Nielsen market, except if the newspaper or broadcast station is failed or failing (or they were grandfathered in). I’ve even come out in support of Fox saving the New York Post from extinction!

*National TV Ownership: No limit on the number of TV stations. (It used to be five.) Now,

“a single entity may own nationwide so long as the station group collectively reaches no more than 39 percent of all U.S. TV households. For the purposes of calculating the ‘national audience reach,’ TV stations on UHF channels (14 and above) count less than TV stations operating on VHF channels (13 and below), this is also known as the UHF Discount.”

generic tvThe UHF Discount – established in 1985, according to Variety – only mattered when we used antennas because UHF stations had weaker signals and were harder to watch. That’s why they only counted half as much as a VHF station. (It wasn’t until 1965 that the FCC required all new TV sets sold in the U.S. to have built-in UHF tuners to receive channels 14+!)

In 2016, the FCC led by Democrats discontinued it because with digital broadcasting, along with cable and satellite, it’s not needed anymore. But big broadcasters wanted to grow larger than the 39 percent rule would allow (especially Ion Media, a major UHF group). In April 2017, the FCC led by Republicans brought it back!

Ajit Pai fcc wikipedia
Ajit Pai (Wikipedia)

The reason was (arguably) to allow the Sinclair-Tribune merger, and FCC chairman Ajit Pai – appointed by President Trump – is under investigation by his agency’s inspector general for his role in that. (Considering today’s technology, can you think of any other reason the FCC brought it back?) Then, in December 2017, the “FCC voted … to launch a review of the FCC’s national 39% broadcast audience reach cap,” according to Broadcasting & Cable magazine. B&C also reported Pai claimed “he was restoring the discount … to consider it in tandem with the (39 percent) cap.” Plus,

“We need to take a holistic look at the national cap rule, including the UHF discount,” Pai said of the item. “The marketplace has changed considerably due to the explosion of video programming options and various technological advances that have occurred since the cap was last considered in 2004. So we need to examine whether our rules should change accordingly.  That’s an important discussion that will be informed by the facts in the record—not anything else.”

It also quoted dissenting Commissioner Mignon Clyburn as saying,

“Giving a single broadcaster the means to buy up enough local stations to exceed the 39% cap is inconsistent with the statute and must be rejected.”

*Dual TV Network Ownership: No merger between ABC, CBS, Fox, and NBC. Remember how NBC’s old Red and Blue radio networks were separated?

*Local TV Multiple Ownership: A company can own up to two TV stations in the same area if either:tv airwaves

*The service areas – known as the digital noise limited service contour – of the stations do not overlap. (I take this to mean Grade B overlaps, where people living in between two markets – like central New Jersey in between New York and Philadelphia, and Boca Raton in between Miami and West Palm Beach – can pick up stations in both cities that are owned by the same company. But, for example, CBS owns stations in New York, Philadelphia and Baltimore, so there must’ve been waivers.)

girl watching tv     *At least one of the stations is not ranked among the top four stations in the DMA (based on audience share), and at least eight independently owned TV stations would remain in the market after the proposed combination. This is important: ratings and number of competitors. Keep them in mind as you read further. According to Wiley on Media, “The Commission determined that a minimum of eight independently owned and operated television stations was required to preserve competition in local television markets” and “The FCC concluded that top four station combinations had the potential to provide a single firm with an unacceptably high market share.” This is why Sinclair-Tribune can’t simply keep the two highest-rated stations in a big city if the sale goes through, or more than one in a smaller city.

*Local Radio/TV Cross-Ownership: Restrictions are based on a sliding scale that varies by the size of the market.

*In markets with at least 20 independently owned “media voices” (defined as full power TV stations and radio stations, major newspapers, and the cable system in the market) an entity can own up to two TV stations and six radio stations (or one TV station and seven radio stations).

*In markets with at least 10 independently owned “media voices” an entity can own up to two TV stations and four radio stations.

*In the smallest markets an entity may own two TV stations and one radio station.

*Local Radio Ownership: Restrictions are also based on a sliding scale that varies by the size of the market, but there’s no need to go into it here.

So the bottom line for now is that at this point, we’re learning some more about what Sinclair and Tribune intend to do with other stations they won’t be allowed to keep if their deal goes through — but whether their deal goes through — and whether Fox is able to buy the stations it wants because Comcast outbid Disney for Sky, but still needs approval — is up in the air(waves).

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P.S. In the spirit of weather, here were Casey and Frisky yesterday. As usual, Frisky (left) was more interested in Mother Nature’s show than Casey (right).