How a Conservative TV Giant Is Ridding Itself of Regulation

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The moves, which include easing a cap on how many stations a broadcaster can own, have opened up lucrative opportunities for Mr. Smith, among them a $3.9 billion bid to buy Tribune Media, another large owner of stations.

Mr. Pai’s deregulatory drive has also helped win him a following as a champion of pro-business, conservative causes — even leading some Republicans to approach him since he was first named to the F.C.C. in 2012 about running for elected office.

Sinclair’s Expanding Range

The Sinclair Broadcast Group owns or operates 173 television stations across the country, almost three times the number it had in 2010. If a proposed merger with Tribune Media is approved, Sinclair would add 42 stations in spots across the United States, making its reach even broader.






Television stations owned or operated by the Sinclair Broadcast Group

Stations fully owned and

operated by Sinclair

Operated under a shared

services agreement

Operated under a local

marketing agreement

50 percent owned

by Sinclair

After potential merger with Tribune Media:

Television stations owned or operated

by the Sinclair Broadcast Group

After potential merger with Tribune Media:

Stations fully owned and

operated by Sinclair

Operated under a shared

services agreement

Operated under a local

marketing agreement

50 percent owned

by Sinclair






An examination of the F.C.C. records shows that the Smith-Pai alliance does not follow the familiar script of a lobbyist with deep pockets influencing policy. Instead, it is a case of a powerful regulator and an industry giant sharing a political ideology, and suddenly, with the election of Mr. Trump, having free rein to pursue it — with both Mr. Smith, 66, and Mr. Pai, 44, reaping rewards.

Neither Mr. Pai nor Mr. Smith would comment for this article.

Associates say both men believe that local television stations, which fall under the commission’s rules because they broadcast over federally owned airwaves, are at a disadvantage when competing against cable companies and online streaming services like Comcast and Netflix.

Tina Pelkey, spokeswoman for Mr. Pai, said the new chairman had not taken steps to help Sinclair specifically; his concerns relate to the broadcast industry generally.

“It has nothing to do with any one company,” Ms. Pelkey said.

Other broadcast companies, as well as the National Association of Broadcasters, have pushed for some of the same changes that have benefited Sinclair.

Loosened regulatory requirements, Sinclair executives said, will help even the playing field and benefit millions of Americans who rely on broadcast stations for news and entertainment by allowing the companies to invest in new equipment and technology.

“Thankfully we’ve got Chairman Pai, who’s launched an action to look at antiquated rules,” Christopher S. Ripley, who became Sinclair’s chief executive in mid-January, said in a recent speech, adding that the rules had “artificially tipped the playing field away from TV broadcast.”

But critics say the rollback undermines the heart of the F.C.C. mission to protect diversity, competition and local control in broadcast media. It also gives an increasingly prominent conservative voice in broadcast television — Sinclair has become known for its right-leaning commentary — an unparalleled national platform, as television remains the preferred source for most Americans of news, according to Pew.

A merger with Tribune would transform Sinclair into a media juggernaut, with reach into seven out of 10 homes through more than 200 stations in cities as diverse as Eureka, Calif., and Huntsville, Ala. The company would have a significant presence in important markets in several electoral swing states, including Pennsylvania, Ohio and North Carolina, and would gain entry into the biggest urban markets: New York, Los Angeles and Chicago.

Photo

Ajit V. Pai, named chairman of the Federal Communications Commission in January, has pursued a deregulatory blitz at the agency.

Credit
Eric Thayer for The New York Times

The result would illustrate the real-world stakes of the Trump administration’s pursuit of dismantling regulations across government. The rollback at the F.C.C., a microcosm of the broader effort, pleases business interests and many Republicans who complain that regulators are heavy-handed and hostile in their approach. It raises alarms among free-speech advocates and many Democrats who say consumers suffer without aggressive oversight.

“I worry that our democracy is at stake because democracy depends on a diversity of voices and competition of news outlets,” said Representative Frank Pallone Jr. of New Jersey, the top Democrat on the House Energy and Commerce Committee.

If Sinclair’s past is any guide, the changes for viewers could be profound.

The company has a history of cutting staffs and shaving costs by requiring stations to share news coverage, in that way reducing unique local content. And it has required stations to air conservative-leaning segments, including law-and-order features from its “Terrorism Alert Desk,” as well as punditry from Republicans like Boris Epshteyn, a former surrogate to Mr. Trump, who was still seen visiting the White House after joining Sinclair.

In the political battleground state of Wisconsin, a merger would give Sinclair six stations in the biggest markets — Milwaukee, Green Bay and Madison — causing some journalists to fear a statewide, coordinated corporate news strategy that would tilt right.

“We’ve moved from a high-quality independent news ownership structure to one where a few companies have outsized influence,” said Lewis A. Friedland, a professor of journalism at the University of Wisconsin-Madison.

Mr. Friedland previously worked as a news manager at WITI, the current Fox affiliate in Milwaukee. It is owned by Tribune and would become part of the Sinclair empire if the merger is approved, as expected.

Sinclair rejects suggestions that its stations push right-leaning views, and says the company’s mission is to be objective in its news coverage.

“We are proud to offer a range of perspectives, both conservative and liberal — to our consumers — on our Sinclair broadcast stations each day,” Scott Livingston, Sinclair’s vice president for news, wrote in a July memo to staff members. “It is unfortunate that so many of our competitors do not provide the same marketplace of ideas.”

Photo


Credit
Doug Wells/The Des Moines Register, via Associated Press

An Opposition Voice Rises

Though Sinclair is not a household name like the conservative cable TV channel Fox News, it has been a powerful operator in Washington, with a decades-long history of courting Republicans and Democrats even as regulators accused it of flouting broadcast rules.

Sinclair was founded in 1971 by Mr. Smith’s father, Julian Sinclair Smith, an electrical engineer with a deep curiosity about new broadcasting technology. At the time, the company consisted of a radio station and a single UHF station in Baltimore, but it wasn’t long before it embarked on an ambitious growth strategy.

With more stations, Sinclair could command more lucrative advertising, and later, higher fees from cable and satellite companies that retransmitted its broadcasts.

Sinclair helped pioneer a range of creative growth techniques that the company insisted were both legal and good for television viewers.

Most notable was its use of so-called joint sales agreements, which allowed it to work around ownership rules that prevented any one company from owning multiple top-rated channels in a single market.

The practice started in 1991 in Pittsburgh as a game of ownership hot potato, when Sinclair sold its station there to an employee, Edwin Edwards, and retained ownership of a second station. The two stations then shared resources and programming, but on paper they remained under separate ownership. David Smith’s mother, Carolyn Smith, later helped fund Mr. Edwards’s company and took a stake in it.

Consumer advocates long complained about the maneuver, and by President Obama’s second term, regulators at the F.C.C., then led by Democrats, were taking a hard look at it.

That is when, records show, Mr. Pai first met with Sinclair’s top lawyers.

Mr. Pai was a fresh Republican face on the commission. He had an impressive background: degrees from Harvard and the University of Chicago Law School, and stints at the Department of Justice, at the general counsel’s office of the F.C.C. and at the Senate Judiciary Committee, as an aide to Sam Brownback, then a Republican senator from Kansas and now the state’s governor.

The child of immigrants from India, he liked to tell the story of how his parents arrived in the United States with nothing but $10 and a transistor radio.

Perhaps most appealing to Sinclair and other TV station owners, Mr. Pai exhibited blanket empathy for the broadcasting industry, both television and radio.

“I’ve been listening carefully to what you have to say,” Mr. Pai told broadcast executives in late 2012. “Unfortunately, it seems there’s a widespread perception that today’s F.C.C. is largely indifferent to the fate of your business.”

An enthusiastic purveyor of free-market philosophy, Mr. Pai quickly became a dependable opponent to regulations created by the F.C.C.’s Democratic majority. He promised to take a “weed whacker” to regulations if he ever became chairman.

“The commission,” he told the broadcast executives, “can do a better job of focusing on what’s important to broadcasters.”

An Alliance Is Forged

Just seven months into Mr. Pai’s tenure, in December 2012, he welcomed a group of visitors to his office: Barry M. Faber, Sinclair’s general counsel, and two of the company’s Washington-based corporate lawyers.

“Television stations have utilized J.S.A.s for at least 10 years,” Mr. Faber told Mr. Pai according to records of the meeting filed with the F.C.C., referring to the joint sales agreements that Sinclair utilized in Pittsburgh and elsewhere.

Mr. Faber added that “to his knowledge, not a single example of harm to program diversity or competition for viewers resulting from J.S.A.s has been documented.”

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