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FCC Investigates Whether Sinclair Showed 'Lack of Candor' When Trying to Buy Tribune



The Federal Communications Commission is investigating whether

            Sinclair Broadcast Group
             SBGI 0.79%

Inc.


SBGI

            Tribune Media
             Co.

      
      last year.

In a June 25 letter to Sinclair viewed by The Wall Street Journal, the FCC said it is investigating whether the nation's largest owner of local television stations "engaged in misrepresentation and / or lack of candor" with the agency when it was seeking approval for the $ 3.9 billion deal.

Nexstar Media Group
         Inc.

      then stepped in last December and bought Tribune in a deal valued at $ 4.1

billion that is still pending FCC approval

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

"This is not new," and Sinclair spokesman said Wednesday, adding that the investigation is part of an ongoing discussion with the FCC "regarding certain allegations raised last year. An FCC spokesman was unavailable for comment.

"This is a big deal. The worst thing you can do to the FCC is lie, "said Andrew Schwartzman, professor at Georgetown Law. "This is the only way to lose a license for a broadcaster. "

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

In the letter, the FCC said it is investigating whether Sinclair's proposed plans to spin off stations to comply with FCC regulations and receive approval of the Tribune deal would have in fact left the broadcaster

A spokesman for Sinclair did not immediately reply to requests for comment Wednesday. Sinclair had previously said his spinoff plans were "consistent with structures that Sinclair and many other broadcasters have been using for many years with the full approval of the FCC."

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

"This may be the beginning of the Bureau to look at these allegations and determine what to do with them before the license renewals that come next year," said Washington, DC, attorney Jack

In the letter, the FCC said Sinclair had until July 9 to respond, warned that "to knowingly and willfully make any false statement or conceal any material fact in its responses" to his inquiry "

One such transaction involved Tribune's WGN-TV Chicago, which Sinclair said was" punishable by fine or imprisonment as well as a violation of the Communications Act. it would sell to the car-dealer dealer Steven Fader for $ 60 million. Not only was that price considered far below the station's value by industry analysts, but Sinclair Chairman David Smith is on the board of a car-dealership concern where Mr.

In his letter to Sinclair, the FCC said he wanted all the details on how Sinclair came up with the $ 60 million valuation as well as all the company's discussions with Mr. Fader regarding who would control the programming, staff and finances of the station. Mr.

The FCC wants similar details about Sinclair's proposed plans to transfer TV stations in Dallas and Houston to Cunningham Broadcasting, which is run by the estate of Mr. Smith's mother, Carolyn Smith.

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

        Dish Network
         Corp.

      In 2017, the FCC fined Sinclair $ 13.4 million for allegedly failing to label programming it aired as sponsored content

The failed Sinclair-Tribune deal also triggered a larger investigation by the Justice Department into whether TV station owners violated antitrust law by sharing ad sales information that could potentially lead to higher advertising rates. Sinclair has a strong national presence not only because of its size, but also because its news programming is known for having a conservative editorial voice

In the 2016 presidential race, Sinclair stations were seen as a safe haven for President Trump's campaign. Last year, Sinclair was criticized for requiring his news anchors to read a critical segment of the national media and accusing outlets of airing "fake stories without checking the facts first."

Earlier this week, three Democratic candidates for President-Sens . Elizabeth Warren (D., Mass.), Cory Booker (D., NJ) and Bernie Sanders (D., Vt.) – sent a letter to the FCC and Justice Department raising concerns about the proposed regional sports deal, reduce the competition in the industry and lead to higher prices for consumers

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


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