Home » FCC » Recent Articles:

Sinclair May Sell Big Tribune TV Stations to Shell Corporation Sinclair’s Founding Family Controls

Allegedly independent Cunningham Broadcasting’s headquarters are located at 2000 West 41st Street in Baltimore, coincidentally the same address as Sinclair-owned WBFF-TV, the city’s FOX affiliate.

An analyst warns Sinclair Broadcasting’s willingness to part with WPIX-TV in New York and WGN-TV in Chicago may amount to transferring control of the stations on paper from one hand to the other.

Broadcasting & Cable reports an unnamed source told the trade publication Sinclair is considering “selling” the stations to Cunningham Broadcasting, which is effectively Sinclair in all but name.

Cunningham and Sinclair are more than a little close. The majority of Cunningham-owned stations are run by Sinclair under local marketing agreements, and Sinclair’s founding family controls more than 90% of Cunningham’s stock. That has led to repeated accusations Cunningham is nothing more than a shell corporation used by Sinclair to circumvent the FCC’s TV station ownership caps, something both companies strenuously deny. But observers note some remarkable coincidences, starting with the Cunningham name itself. Cunningham Farms, on a 200-acre estate, Cunningham Manor, are both owned by Sinclair executive chairman David Smith.

Cunningham Broadcasting’s corporate headquarters are inside the studios of WBFF-TV, Sinclair’s FOX affiliate in Baltimore. Cunningham owns WNUV, Baltimore’s CW affiliate, which is also run from the same building as WBFF.

WNUV was originally planned to be a direct Sinclair acquisition, but FCC rules prohibited that. So Sinclair guaranteed loans allowing Glencairn Ltd., (later to be renamed Cunningham Broadcasting), to acquire WNUV instead. At the time, Carolyn Cunningham Smith, the mother of Sinclair’s current executive chairman David Smith, had voting control of Cunningham. That control has since passed to a trust run for the benefit of Smith’s children after Carolyn died in 2012.

After Glencairn/Cunningham won control of the station, it immediately signed a local marketing agreement with Sinclair. That agreement merged WNUV’s operations under the control of Sinclair-owned WBFF. Most employees at WNUV report to Sinclair management. Many of the Cunningham-owned stations also offer options to Sinclair to acquire the stations outright should deregulation of ownership limits permit.

A shell corporation is essentially an entity in name only, usually quietly controlled by someone else seeking to keep their true identity secret.

Should WPIX-TV and WGN-TV end up in the hands of Cunningham, it would be unprecedented for a company its own president admitted in 2013 was dependent on Sinclair to help program their stations, noting Sinclair is “a smart company, and they certainly have a lot more experience.” WPIX is in the nation’s number one television market, WGN is in the third largest market. The majority of Cunningham’s 20 stations are FOX, CW, or MyNetworkTV affiliates in small and medium-sized markets. A few are so small, they don’t even have websites.

Craig Aaron, president and CEO of Free Press, suspects Sinclair could once again be thumbing its nose at the FCC’s ownership caps, and the planned divestiture may be in name only.

“It’s not clear to me who the new owner is going to be from the documents filed, but it sure looks like business as usual for Sinclair, which has long specialized in propping up shell companies to evade FCC rules,” Aaron told The Baltimore Sun. “The idea that Armstrong Williams [owner of another side entity that also owns stations that Sinclair runs] or Cunningham or whoever they are setting up as the ‘owner’ of these stations is independent from Sinclair, at least if the past is any guide, is a complete fiction. Sinclair should not be allowed to set up shady front companies to evade the congressionally mandated ownership caps. But Ajit Pai’s FCC is aiding and abetting this ruse in every way.”

The FCC’s inspector general is reportedly now investigating whether Pai improperly pushed through ownership cap rule changes to directly benefit Sinclair’s efforts to grow even larger.

Should Sinclair successfully acquire Tribune Media’s television stations, Sinclair will control 233 television stations that reach 72 percent of U.S. households. The FCC’s media ownership cap now limits an single owner’s reach to 39% of the nation’s audience.

While the FCC has shown little interest in slowing down Sinclair, the Justice Department has previously blocked some of Sinclair’s moves. When Sinclair was forced to divest WSYT-TV, the FOX affiliate in Syracuse, N.Y., it first hoped to sell the station to Howard Stirk Holdings, owned by conservative commentator Armstrong Williams.

Williams coincidentally has served as a longtime commentator for Sinclair, which forces its owned and operated stations to carry conservative messages in local newscasts. Sinclair believed so much in Armstrong, it guaranteed his company’s acquisition loans in similar deals. Sinclair may also benefit from the fact that Armstrong, a minority, gets extra consideration and relaxed rules from the FCC to promote minority station ownership. In other deals, after taking ownership, Armstrong promptly signed contracts with Sinclair to run the stations for him.

The Justice Department was not convinced by explanations of the close relationship between Armstrong and Sinclair. It objected to the sale, writing “it wouldn’t work” because “it would still be like a duopoly.” Sinclair also couldn’t persuade the Justice Department to believe Sinclair and Cunningham were completely independent companies either, eventually forcing Sinclair to abandon efforts to sell WSYT to Cunningham. Today WSYT is owned by Northwest Broadcasting, which owns a handful of stations in the rural Rocky Mountain west and has no ties to Sinclair.

Anderson admitted what was behind the maneuvering to sell WSYT in a 2013 Wall Street Journal story.

“They [The Justice Department] were not comfortable yet,” Anderson said, “and in the interest of time, Sinclair went to Plan B [selling the station to Northwest Broadcasting].”

“It’s a scandal,” Aaron told CNN in 2017. “Trump-favoring mega-chain [Sinclair] gets rules changed — and expects others to be erased — so it can put its cookie-cutter newscasts in nearly 70 percent of local markets across the country. I feel terrible for the local journalists who will be forced to set aside their news judgment to air Trump administration talking points and reactionary commentaries from headquarters. This deal would have been DOA in any other administration, but the Trump FCC isn’t just approving it; they’re practically arranging it.”

Sinclair Offers to Sell WPIX, WGN to Win Approval of Tribune Station Deal

Phillip Dampier February 21, 2018 Competition, Online Video, Public Policy & Gov't No Comments

Sinclair Broadcast Group has told the Federal Communications Commission it is willing to sell two well-recognized TV stations in Chicago and New York owned by Tribune Media if it will help win approval of its $3.9 billion acquisition of Tribune-owned stations by the Justice Department and FCC.

The move is a sign Sinclair may be concerned its blockbuster acquisition might not get approved if the deal remains mired in the regulatory review process.

The filing is effectively a new application because it fundamentally changes the structure of the deal and its impact on several TV markets where Sinclair could own multiple stations in a single city.

Few expected Sinclair would offer to divest WGN-TV Chicago and WPIX-TV in New York, which are major market stations with major advertising revenue. Sinclair also offered to sell off KSWB-TV, San Diego’s FOX affiliate, to keep Sinclair under the FCC’s theoretical 39% nationwide audience cap, which was watered down in 2017 by FCC Chairman Ajit Pai’s plan to count UHF stations at only 50% of their actual viewing audiences — a direct benefit to Sinclair, which already owns and controls an enormous station group that had been constrained from getting much larger.

As part of the revised proposal, Sinclair will sell one or more stations in the following markets, with FOX often mentioned as a potential buyer:

  1. Seattle, Washington;
  2. St. Louis, Missouri;
  3. Salt Lake City, Utah;
  4. Oklahoma City, Oklahoma;
  5. Greensboro-High Point-Winston Salem, North Carolina;
  6. Grand Rapids, Michigan;
  7. Richmond, Virginia;
  8. Des Moines-Ames, Iowa.

But Sinclair is seeking a waiver to continue to own two of the top four stations in Greensboro-High Point-Winston Salem, N.C., Harrisburg-Lancaster-Lebanon-York, Pa., and Indianapolis, Ind.

Selling WPIX and WGN will likely make a significant dent in Sinclair’s acquisition expenses, if the deal is approved.

WPIX and WGNhave been owned by Tribune since both stations first signed on in 1948.

N.Y. Attorney General Overcomes Charter’s Legal Objections to Slow Internet Lawsuit

Phillip Dampier February 20, 2018 Charter Spectrum, Consumer News, Public Policy & Gov't 6 Comments

Charter Communications will have to face a courtroom to answer accusations the cable company intentionally sold internet service at speeds it knew it could not provide to its customers in New York.

New York State Supreme Court Justice O. Peter Sherwood rejected a motion by the cable company to dismiss New York Attorney General Eric Schneiderman’s 2017 lawsuit accusing Time Warner Cable (now owned by Charter) of systematically shortchanging as many as 640,000 New York internet customers by falsely advertising internet speeds it knew it could not deliver, often with at least 900,000 outdated company-provided cable modems incapable of supporting the higher speeds the company promoted.

“Today’s decision by the New York Supreme Court marks a major victory for New York consumers — rejecting every single argument made by Charter-Spectrum in its attempts to block our lawsuit,” said Schneiderman. “This decision ensures that our office can continue to hold Charter-Spectrum to account for its failure to deliver the reliable internet speeds it promised consumers, ripping you off by promising internet speeds it simply could not deliver.”

Charter’s Defense: Spectrum’s Ad Claims for Fast Internet Service are: “Prototypical instances of non-actionable puffery.”

Charter’s lawyers attempted a variety of legal strategies to get Schneiderman’s lawsuit tossed, including undermining the cable company’s own marketing efforts. Lawyers argued the court should ignore Charter’s claims it sold a “blazing fast, super-reliable connection” that could “stream Netflix and Hulu movies and shows effortlessly” as nothing more than “prototypical instances of non-actionable puffery.”

Scheniderman’s office claimed it was much more than that.

N.Y. Attorney General Eric Schneiderman

“Spectrum-TWC failed to maintain enough network capacity in the form of interconnection ports to deliver this promised content to its subscribers without slowdowns, interruptions, and data loss,” stated Schneiderman. “It effectively ‘throttled’ access to Netflix and other content providers by allowing the ports through which its network interconnects with data coming from those providers to degrade, causing slowdowns. Spectrum-TWC then extracted payments from those content providers as a condition for upgrading the ports As a result, Spectrum-TWC’s subscribers could not reliably access the content they were promised, and instead were subjected to the buffering, slowdowns and other interruptions in service that they had been assured they would not encounter.”

Charter also claimed it was not legally responsible for meeting its own advertised speeds because the company only sold speeds “up to” a level, without guaranteeing customers would get the speeds it advertised.

Even if a judge found Charter lacking in its legal defense, lawyers for the company more broadly argued that under FCC Chairman Ajit Pai’s net neutrality order, state courts and regulators had no power to regulate or oversee broadband providers because “regulation of broadband internet access service should be governed principally by a uniform set of federal regulations, rather than by a patchwork of separate state and local requirements,” according to Charter’s attorney Christopher Clark.

Justice Sherwood uniformly rejected all of Charter’s arguments to dismiss the case:

  • Improper state venue for the lawsuit: “Spectrum-TWC fails to identify any provision [of law] that preempts state anti-fraud or consumer-protection claims, or reflects any intention by Congress to make federal law the exclusive source of law protecting consumers from broadband providers’ deceptive conduct.”
  • False advertising: “This court finds that, contrary to defendants’ contentions, the FCC’s goal of promoting competition through [the Internet Transparency Rule], the FCC stated that the rule was intended to ensure consumers had the “right to accurate information, so [they] can choose, monitor, and receive the broadband internet services they have been promised. New York’s Executive Law and Consumer Protection Act […] require that [providers] refrain from fraud, deception, and false advertising when communicating with New York consumers.
  • Netflix/YouTube slowdowns: The issue of interconnection agreements between content providers and Spectrum-TWC are matters for the court to consider because it is not an attempt to regulate those agreements. “Rather, the complaint simply alleges that Spectrum-TWC misled subscribers by claiming that specific online content would be swiftly accessible through its network, while it was simultaneously deliberately allowing that service to degrade […] and failing to upgrade its network’s capacity to meet demand for this content.”
  • “Up to” speeds: Spectrum-TWC claimed that advertising speeds “up to” a certain level was not misleading because consumers understood this to mean the maximum speed, not average speed. In Spectrum’s argument, it claimed “reasonable consumers understand this is not a promise of ‘minimum’ performance, but rather ‘maximum’ performance.” But the judge disagreed. “Defendant’s theory is contrary to New York law regarding ‘up to’ claims” when those speeds are “functionally unattainable as a result of the defendants’ knowing conduct.”

Schneiderman’s office is seeking civil fines and restitution from Spectrum-TWC for customers in New York.

Trump’s FTC Nominees Signal Agency Will Take More Relaxed Approach to Consumer Protection

At a hearing Wednesday to question President Donald Trump’s nominees for the Federal Trade Commission, Democrats expressed concern about some signals from the three Republican and one Democratic nominees that they intend to enforce consumer protection laws as long as there is evidence they have the indisputable authority to act.

What happens when corporate interests and special interest groups insist the FTC’s regulatory powers are uncertain, limited by precedent, blocked by court opinions, or contrary to the wishes of Congress remained uncertain after the hearing.

The Senate Commerce Committee is facing some urgency to approve the nominations to fill a large number of vacancies at the FTC, which currently prevents the agency from taking votes on actions. If all four nominees are approved, the FTC will still have a single open commissioner’s seat on the Democratic side.

The nominated FTC commissioners are:

Simons

Joseph J. Simons, nominated for chairman for the FTC, is a Republican antitrust lawyer who has taken a few trips through Washington’s revolving door, serving as chief of the FTC’s Competition Bureau, investigating mergers and anticompetitive conduct from 2001 to 2003 under President George W. Bush. During his tenure, the FTC mostly pursued high-profile cases that brought clear evidence of antitrust harm. Under Simons, the FTC blocked Libbey, Inc. from acquiring its chief glassware rival Anchor Hocking. Vlasic Foods International and Claussen Pickle found an unreceptive FTC for their merger, eventually also blocked. Simons was noted for investigating pharmaceutical companies that applied for misleading drug patents designed to delay the entry of cheaper generic versions of brand name pharmaceutical products. After his tenure at the FTC, Simons accepted a lucrative $1.9 million partnership at the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, which handles corporate mergers and acquisitions for corporate clients.

Wilson

Christine S. Wilson, a Delta Air Lines executive, is also a frequent flyer through D.C.’s revolving door. During the George W. Bush administration, she was chief of staff for then-FTC chairman Tim Muris. She also held three other significant corporate-public policy positions that advised companies and the U.S. government about antitrust matters. In 2011, Wilson accepted a high paying partnership at Kirkland and Ellis, a firm well-regarded for helping corporations successfully complete antitrust reviews of their mergers and acquisitions. Wilson’s latest employer was Delta Air Lines, which offered her an executive position in August 2016 as the company’s senior vice president for legal, regulatory, and international affairs. In addition to the $521,000 in distributions Wilson earned from her partnership at Kirkland and Ellis, Wilson accepted an undisclosed cash signing bonus, $136,000 in bonuses in 2017 from a management incentive plan, and a regular salary of $390,000. Wilson retains various amounts of unvested Delta stock and stock options that would normally be lost after leaving the company, but Delta apparently wanted to part with Wilson on the friendliest of terms, granting her pro rata compensation for the stock and waiving the usual requirement that an employee leaving so quickly after being hired should pay back 50% of their signing bonus.

Phillips

Noah Joshua Phillips served as chief counsel for Republican Sen. John Cornyn at the Senate Judiciary Committee. Before coming to Capitol Hill, Phillips was an associate at Steptoe & Johnson LLP in Washington and at Cravath, Swaine & Moore in New York. He focused on civil litigation.

Consumer Federation of America senior fellow Rohit Chopra is a Democrat and the only nominee with a long record of representing consumer interests and pushing for increased consumer protection and better oversight of financial services and products targeting consumers. Chopra was previously assistant director of the Consumer Financial Protection Bureau, where he oversaw the agency’s agenda on students and young consumers. He specialized in targeting the student loan industry for abusive practices and secured hundreds of millions of dollars in relief for student loan borrowers.

Chopra

Because of the unprecedented number of vacancies at the Commission, President Trump’s nominees could have an enormous impact on the direction of the FTC over the next several years. Traditionally, three of the commissioners belong to the current president’s political party and two belong to the other party.

Observers suggest the nominees are not atypical for a Republican president to nominate and some have served at the FTC before. None have attracted the kind of controversy that followed Makan Delrahim, Trump’s pick for head of the U.S. Department of Justice’s Antitrust Division. Most expect the Republican majority-led FTC will bend towards the interests of businesses unless there is clear and convincing evidence of significant consumer harm, especially in cases of mergers and acquisitions.

“Traditionally, Republican commissioners tend to be more lenient in merger enforcement on the marginal case, and we haven’t seen any evidence to indicate that [Simons] would depart from the traditional Republican posture,” said Mary Lehner, a partner with Freshfields and a former FTC attorney who also served as an adviser to two chairmen of the agency.

A major concern for some Democrats is that the FTC is now being tasked with protecting what remains of net neutrality, the open internet protocol that was swept away by the Republican majority at the Federal Communications Commission. The FCC reclassified internet service providers once again as “information services,” under Title 1 of the Communications Act. That transfers oversight back to the FTC — an agency not known for careful oversight of internet providers’ business practices.

At the hearing, Simons equivocated on how the FTC will deal with allegations of ISP abuse and signaled his concern that a Ninth Circuit court ruling found that telecommunications companies that also serve as common carriers (ie. telephone companies) are completely exempt from FTC authority.

Some Democrats interpreted Simons’ remarks as suggesting he could adopt a “my hands are tied” approach to ISP oversight, claiming that the FTC lacks the authority to keep an eye out for industry abuses.

Sen. Ed Markey (D-Mass.) seized on such comments, asking Simons to confirm if he believes the FTC specifically “lacks rulemaking authority” on net neutrality while the FCC, directly responsible for transferring net neutrality enforcement away from itself, “does have rulemaking authority to prevent blocking, throttling and paid prioritization by ISPs.”

Simons prevaricated in his answer, telling Markey, “We both have rulemaking, and they’re different types of rulemaking.”

Markey

“I’d want to talk to the general counsel’s office before I gave a specific answer to that, but I’m not entirely clear,” Simons said in response to a followup question pressing the issue.

“We are going to take the [statutory] authority we have and use it as best we can,” Simons told senators at the Senate Commerce Committee hearing. “I don’t know exactly what types of anti-competitive or deceptive and unfair practices may come up. If something comes up that we can’t reach under our statute, then I would certainly talk to you about a federal legislative fix.”

But observers note such a fix could take years, and the FTC often takes a year or more to complete investigations of alleged wrongdoing before starting to act.

Chopra, the lone Democratic nominee, agreed with Democrats that he also feared the FTC’s authority to act is uncertain, and that lack of certainty is likely to delay any enforcement actions. Chopra comments suggested the telecom industry is likely to use the Ninth Circuit court ruling to their advantage.

“I share a lot of the skepticism and concerns,” Chopra told the committee. “The FTC may face an unlevel playing field where some major market participants are exempt from the commission’s authority while others are subject to it.”

Blumenthal

Sen. Richard Blumenthal (D-Conn.) said that single Ninth Circuit court ruling could provide the telecom industry with a ready-made loophole to escape the FTC’s jurisdiction altogether. An ISP could acquire “a minor side business” like a small rural telephone company subject to common carrier rules and win blanket corporate immunity from FTC oversight. Although Simons said he would support striking the common carrier exemption from the Federal Trade Commission Act which defines the FTC’s authority, such a change could take several years to get through Congress and a well-funded telecom industry lobbying effort.

Phillips seemed impatient about the net neutrality debate which occupied a significant part of the hearing, characterizing it as a side issue worth sidestepping to focus on broader issues.

“We can’t allow contentious issues to distract us from the bread and butter of the agency […] looking out for children, veterans, the elderly and Americans generally,” Phillips said.

Aside from the net neutrality debate, the Republican nominees signaled their interest in the possibility of investigating large tech companies like Google, Amazon, and Facebook for antitrust activities. Republicans have been especially critical of Google, and some conservatives believe Twitter and Facebook exhibit political bias against them. The president has also frequently attacked Amazon and its CEO Jeff Bezos. Bezos owns the Washington Post, one of the many news outlets Trump said has been unfair to him. Trump has also accused Amazon of stiffing the government on sales taxes.

“Oftentimes companies get big because they are successful with the consumer, they offer a good service at a low price,” Simons said. “And that’s a good thing, and we don’t want to interfere with that. On the other hand, companies that are already big and influential can sometimes use inappropriate means — anticompetitive means — to get big or to stay big. And if that’s the case then we should be vigorously enforcing the antitrust laws.”

Another issue the FTC nominees promised to prioritize: online security/data breaches which expose consumers’ private information.

AT&T Replacing Storm/Wildfire Damaged Copper Wiring With Fiber Optics

Phillip Dampier February 14, 2018 AT&T, Consumer News, Public Policy & Gov't, Verizon 1 Comment

AT&T is staying committed to its wireline network in the face of two significant natural disasters by replacing beyond-repair copper wiring with fiber optics.

The phone company has recently notified the Federal Communications Commission its existing facilities in parts of California that were damaged by last year’s wildfires will be replaced by fiber optic infrastructure.

Fierce Telecom notes customers affected by the Nuns, Tubbs, Redwood and Sulphur fires will be served by a new optical fiber network in portions of Sonoma, Ukiah, Santa Rosa, and Lower Lake.

“The circuits will be transferred to fiber based NGDLC systems,” AT&T said in a FCC filing. “The transfer of these circuits does not compromise the capacity of the cabinets.”

In Florida, as a result of last September’s Hurricane Irma, AT&T will migrate its irreparably damaged copper wire network that strings throughout the Florida Keys to a new fiber to the home network.

AT&T’s decision to maintain its wired networks comes in contrast to Verizon’s 2013 attempt to scrap its copper facilities on Fire Island, N.Y. and certain New Jersey barrier islands left devastated by Superstorm Sandy. Verizon hoped to replace traditional landline service with a wireless alternative known as VoiceLink. A firestorm of protests over the service’s limitations, sound quality, and reliability forced Verizon to scrap the plan in New York and install its FiOS fiber-to-the-home network instead.

Search This Site:

Contributions:

Recent Comments:

  • jeff: if u tell the system u want to be a new customer it will let u add the choice option after selecting internet only. if current customer with tv it do...
  • EJ: Kaniki we all know what is happening. They charge that because they can. In most areas there one competitor is inferior so they can charge to much and...
  • Todd: And 300M to Charter/Spectrum is peanuts. They increased ELP Internet from $14.99 to $19.99. I'm not a math major, but let me see if I have this righ...
  • Todd: I got called with this offer yesterday, actually. The problem with this, is yes, at $22, it seems like a good deal, and I'd almost consider it. Exce...
  • Quinn: Spectrum is awful. I very much preferred dealing with them when it was just Time Warner. At least if I spent some time I could get myself a good promo...
  • kaniki: and yet, they still do nothing about the things that people need more.. Like an internet service that they can afford.. Cable is a luxury, but, a lot ...
  • L. Nova: In the long run it is cheaper for CenturyLink to partner with streaming providers Netflix, Amazon, Sling TV & HULU and the hardware streaming box ...
  • Frances: Currently we only get 100Mpbs which is the new standard to my understanding. So I contacted spectrum about if that was the standard why are we being ...
  • KevinS: The service failed for the basic fact that CenturyLink fails to provide any form of broadband internet to bundle with the service and phone. Or..is t...
  • Matthew: They are making huge improvements. Gig speeds are coming soon for WNY. Time Warner would even upgrade WNY to 300 meg. Node splits are going on ever...
  • RochMN: Tried calling Charter Business to update the service from 60 Mbps. Was told it will be $99.99 for upgrade and then $199.99 per month after! I cannot b...
  • Racerbob: As an almost 20 year user of Time Warner/Spectrum internet service, I have seen it all. But right now, in my home, Spectrum is providing me a superior...

Your Account: