April 14, 2025
Today, Frequency Forward, a public interest watchdog and
advocacy group and member Randy Bryce of Caledonia, Wisconsin filed a legal
petition at the Federal Communications Commission (FCC) to deny the license
transfer applications of five TV station licenses held by Sinclair Broadcasting,
founded and operated by David D. Smith.
This legal Petition “alleges that Sinclair lacks the
requisite character to hold FCC licenses.” It cites Sinclair Broadcasting’s formation
of shell corporations, principally Cunningham
Broadcasting and Deerfield Media, Inc. to skirt federal law (allowing
one broadcaster to reach no more than 39% of the national TV viewing public and
FCC rules prohibiting one broadcaster from licensing or controlling more than
two TV stations in a single TV viewing market without prior FCC approval.)
Frequency Forward attorney Art Belendiuk says, “Frequency
Forward has demonstrated that Sinclair Broadcasting controls more television
stations than permitted by the FCC rules. Sinclair has worked to actively
conceal the full extent of its control over these stations, making repeated
misrepresentations to the FCC and statements that lack candor. It has gone so
far as to make material misrepresentations to questions asked in the course of
the FCC’s investigation into the extent of its control over these front
companies.”
The FCC
requires broadcasters are to be of good character to qualify to hold a
license to broadcast to the public. The Commission brought this character issue
to the forefront in 2017 when then Republican FCC Chair Ajit Pai found
misrepresentations by Sinclair on the proposed $3.9 billion merger for Sinclair
to acquire broadcast licenses held by Tribune Broadcasting. An approved merger would
have resulted in Sinclair having operational control over stations available in 72 percent of all households
with a TV set in the United States. FCC Chair Pai called for a Hearing
Designation Order based on those representations.
From today’s Petition:
Before
the HDO was issued Sinclair
withdrew the Cunningham and Fader applications. Nonetheless, the Commission
concluded: “that 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.”
In
reviewing the proposed transfers, the Commission concluded: “The record raises significant
questions as to whether those proposed divestitures were in fact ‘sham’ transactions.”
Although the deal was scuttled, the presiding Judge, in
terminating the hearing, made it clear these character issues would need to be
litigated in a future proceeding:
That
is not to say that Sinclair’s alleged misconduct
is nullified or excused by the cancellation of its proposed
deal with Tribune. Certainly, the
behavior of a multiple-station owner before the
Commission “may be so fundamental to a licensee’s
operation that it is relevant to its qualifications to hold
any station license.”
That
broad inquiry, however, would be more appropriately
considered in the context of a future proceeding in which
Sinclair is seeking Commission
approval, for example, involving an
application for a license assignment, transfer, or renewal. At that
time, it may be determined that an examination of the
misrepresentation and/or lack of candor allegations raised in this
proceeding is warranted as part of a more general
assessment of Sinclair’s basic character qualifications to be a
Commission licensee.
This proposed transfer from of licenses from Sinclair to Rincon
Broadcasting provides the opportunity for the FCC to thoroughly examine these issues
per its own Administrative
Law Judge Jane Halprin’s demand.
The Petition details a shell game Sinclair has played over
decades to skirt the law and FCC rules. It states the Smith family came up with
a scheme to form broadcasting companies Deerfield Media and Cunningham
Broadcasting, hire and control the supposed CEO’s of those companies, and then
operate those TV Stations licensed by Deerfield and Cunningham through fraudulent
Joint Sales Agreements (JSAs), Shared Service Agreements (SSA’s), and Local
Marketing Agreements (LMAs).
The Petition brings up many examples of the Smith family’s machinations
to hide the family’s real interest in multiple broadcast stations they legally
could not control. For example, upon the Smith family matriarch’s death, Cunningham
Broadcasting’s former banker Michael Anderson became the successor trustee to
Carolyn Smith; Anderson later acquired all the voting shares of Cunningham. But
The
nonvoting shares continue to be held by trusts for the benefit of Carolyn
Smith’s grandchildren. Each of Carolyn Smith’s four sons holds an option to
acquire the voting shares of Cunningham.
Similarly, in the scuttled Tribune merger which rose
eyebrows at the FCC for including a proposed
sale of Superstation WGN to Sinclair for a mere $60 million,
The
sale of WGN also came with an option agreement, giving Sinclair the opportunity
to buy the station back at the same price anytime within the next 48 years.
The Petition also cites the fact that the same attorneys
represent Sinclair, Cunningham and Deerfield.
Thomas
& Libowitz, P.A. is Sinclair’s corporate law firm and represents the three
companies on many of their corporate filings. Pillsbury, Winthrop, Shaw,
Pittman, LLP represents Sinclair, Cunningham and Deerfield, as FCC counsel.
Pillsbury’s name appears on numerous FCC filings on behalf of these companies. A
lawyer cannot represent multiple clients in the same matter if there is or
likely to be a conflict of interest.”
The results of an October 28, 2020 Freedom
of Information Act request by this author seeking the FCC Media Bureau’s four HDO Investigation documents
it used in determining that Sinclair should not go through a hearing are
referenced in detail.
Categorically,
the HDO Investigation documents do not support the Bureau’s claim that Sinclair
acted in good faith. On the contrary, they support the Commission’s initial
conclusion that Sinclair is in de facto control of Cunningham and other
Sinclair operated front companies. In fact, they provide further evidence that
Sinclair was willing to dissemble to maintain it control over the front
companies.
…A
review of the FOIA documents makes it clear that Sinclair was neither honest
nor forthcoming with the Bureau’s investigation of the designated misrepresentation
and real party in interest issues. Sinclair’s responses to the LOI add another layer
of deceit to its growing list of false statements, concealments and
misrepresentations.
The FCC Media Bureau scuttled Chair Pai’s hearing and instead imposed a Consent Decree
and fine of $48 million on Sinclair (included the unpaid 2017 $13.4 million
fine imposed on the broadcaster for masquerading
advertising content as news.)
The
Media Bureau had no authority to issue the Consent Decree. The real party in
interest and misrepresentation issues remain unresolved before the FCC.
Accordingly, the FCC should designate the referenced applications for hearing
to resolve the substantial and material questions of fact whether Sinclair is
in de facto control of Cunningham, Deerfield and its other front companies and
whether Sinclair has the requisite character qualifications to remain a
Commission licensee. Petitioner maintains that the evidence clearly shows that
it does not.
The license transfers being challenged are Sinclair KHQA
Hannibal MO, KTVO Kirksville, MO, WICS Springfield, IL, WICD-TV Champlain, IL, and WVTV Milwaukee, WI. The licenses are proposed to be
transferred to Rincon Broadcasting Group LLC. Rincon is principally owned by Todd Parkin, who formerly served as Vice
President of Ad Sales and Strategy for Sinclair’s Bally Sports networks.
In a press release from Frequency Forward, attorney
Belendiuk states, “These companies are not independent broadcasters; they’re
fronts for Sinclair. Chairman Brendan Carr has said he’s committed to treating
all broadcast licensing matters fairly and balanced, and we hope he approaches
this case with the same urgency and determination he’s shown in his first
months as Chair.”
