Broadband Cable Association of Pennsylvania

NewsClips

December 9, 2013

The Federal Communications Commission on Friday asked Sinclair Broadcast Group Inc. to amend or withdraw its plans to use so-called sidecar companies as part of its acquisition of Allbritton Communications Co.'s TV stations, an unusual level of scrutiny for a tactic that has helped fuel broadcast-industry consolidation.

The agency made the request in a letter to Sinclair's lawyers. In the Allbritton deal, Sinclair proposed to spin off several stations into separate entities known as sidecars, a move that would allow it to sidestep FCC rules governing the number of stations a broadcaster can own in a particular market. Such arrangements are becoming more common in the industry. Sinclair pioneered the maneuver two decades ago and it has helped the company become the largest station owner and operator in the country, by number of stations. But critics have raised questions about the tactic, arguing that Sinclair operates and effectively controls the sidecar companies.

The heightened scrutiny represents a shift for the FCC. "In the past, the commission staff has been very acquiescent with respect to these kinds of arrangements," said Andy Schwartzman, a lawyer and advisor to anti-consolidation advocacy group Free Press. Barry Faber, Sinclair's general counsel, said, "Responding to inquiries from the FCC, and making revisions to transaction documents in order to meet potential concerns, is not uncommon during the FCC review process and we are confident that we will be able to work out the issues raised in the FCC's letter and complete the transaction without any material impact."

Sinclair agreed in July to buy the group of eight stations owned and controlled by the Allbritton family, including the Washington, D.C., ABC affiliate WJLA, for $985 million. The deal would put Sinclair over the FCC's ownership cap in three markets where it already had holdings-Charleston, S.C., Birmingham, Ala., and Harrisburg, Pa.,-but the company filed plans with the FCC to spin off stations in those markets to sidecars. These companies, Deerfield Media Inc. and Howard Stirk Holdings LLC, exclusively own stations that Sinclair helps run. Deerfield is owned by a former banker to Sinclair Chief Executive David Smith, while Howard Stirk is owned by a conservative commentator who, in a previous interview with The Wall Street Journal, described Mr. Smith as "one of my best friends in the world."

Friday's letter from the FCC says that proposed transactions in these three markets "would violate our local TV ownership rules" because they would cause existing sidecar deals that had been grandfathered in under old FCC rules to no longer be valid. The letter also asked Sinclair to demonstrate that its sidecar companies are financially independent and aren't controlled by Sinclair.

In September, the American Cable Association, Free Press and Jesse Jackson's Rainbow PUSH Coalition asked the FCC to block all or parts of the Allbritton deal, objecting to Sinclair's plans to sell some overlapping stations to buyers close to Sinclair. Matt Wood, the policy director of Free Press, which recently released a report on the widespread use of sidecar deals in the industry, said the impact the FCC's inquiry will have on the industry will depend on whether the regulatory body continues to ask questions. "The sidecar companies really are a fiction, and I hope that the FCC doesn't settle for another chapter of fiction," he said. Wall Street Journal

After noting in a blogpost last week that the annual PA Society gathering of state pols and big shots in New York City (scheduled for this coming weekend) should be moved to PA so money spent by state revelers would benefit their own state, a reader offered a specific destination - complete with details.

"Mr. Baer: Thank you for suggesting that the Pennsylvania Society meet here in Pennsylvania instead of New York City. We'd like to nominate ourselves as the ideal venue for this grand occasion. The Moose Lodge here in Tunkhannock now has five (yes, five!) handicapped parking spots. Plus, we re-graveled our overflow lot last summer, which should mean fewer Audis and Lexuses getting stuck out back.

Our kitchen makes a terrific haluski and everyone says our spaghetti dinner just can't be beat. If necessary, Mrs. Osterhaut will even change the oil in the deep fryers just for this event. Two of our pool tables have brand new felt tops and our balls were just cleaned.

For entertainment, we know there's a pretty good polka band over in Pittston that is probably available - but you'd better call them now to be on the safe side. Our dance floor was varnished in 2009 and is actually holding up pretty good in spite of our frequent line-dancing nights. Because we know shopping is always a popular side activity, remember that we have a Dollar General AND a Fashion Bug along with the Walmart Supercenter down on Hunter Highway. We like to say that if you can't find it there, you probably don't need it.

For lodging, the Prince Hotel and Comfort Inn are excellent choices. The Methodist Church might have some cots available if both of those places are full-up. We hope the Pennsylvania Society people will come see us for a better understanding of the citizens they represent. After all, they probably won't bump into us on the streets of NYC anytime soon. (Or, maybe that's the point).

With tongue firmly in cheek, A resident of Pennsylvania" John Baer's blog on philly.com

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