We’re taking a week off to do research, prepare some testimony for the Charter-New York State settlement with the Public Service Commission, and clean and organize the office.

Enjoy the Independence Day holiday and we’ll be back on Monday with more news and features!

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WASHINGTON (Reuters) – The Federal Communications Commission has opened a new investigation into whether Sinclair Broadcast Group Inc engaged in misrepresentations or a lack of candor in its failed effort to win approval for a $3.9 billion bid to purchase Tribune Media Co.

In a June 25 letter to Sinclair posted Wednesday on the FCC’s website, the government agency directed Sinclair to answer a series of questions and provide documents by July 9, warning that “failing to respond accurately and completely to this (letter) constitutes a violation of the act and our rules.”

Sinclair did not immediately respond to a Reuters request for comment.

An administrative judge in March dropped a hearing into allegations that Sinclair, the largest U.S. broadcast station owner, may have misled regulators. Judge Jane Halprin added however that the allegations “are extremely serious charges that reasonably warrant a thorough examination.”

Tribune terminated the sale of 42 TV stations in 33 markets to Sinclair, which has 192 stations, in August. A month earlier the FCC referred the deal for a hearing, questioning Sinclair’s candor over the planned sale of some stations and suggesting Sinclair would effectively retain control over them.

The collapse of the deal, which was backed by U.S. President Donald Trump, potentially ended Sinclair’s hopes of building a national conservative-leaning TV powerhouse that might have rivaled Twenty-First Century Fox Inc’s Fox News.

Sinclair in March said it continues “to maintain that we were completely candid, transparent and honest with the FCC during its review of our proposed acquisition of Tribune Media.”

Andrew Schwartzman, a law professor at Georgetown University, said the FCC could have waited to address the issues when Sinclair’s licenses were up for renewal, but said the inquiry was “inevitable” given the FCC’s prior findings.

After the deal collapsed, the FCC’s Enforcement Bureau said it did not oppose dismissal of the hearing proceeding.

Part of a letter sent by the FCC to Sinclair Broadcasting.

Nexstar Media Group Inc said in December it will buy Tribune in a $4.1 billion deal that would make it the largest regional U.S. TV station operator. The deal is still under review by the Justice Department and the FCC.

Democrats accused Sinclair of slanting news coverage in favor of Republicans. Trump last year criticized the Republican-led FCC for not approving the Tribune deal, saying on Twitter it “would have been a great and much needed Conservative voice for and of the People.”

In 2017, the FCC said it was fining Sinclair $13.38 million after it failed to properly disclose that paid programming that aired on local TV stations was sponsored by a cancer institute.

In the latest inquiry, Sinclair could face new fines.

In May, Walt Disney Co said it would sell its interests in 21 regional sports networks and Fox College Sports to Sinclair for $9.6 billion.

Reporting by David Shepardson; Editing by Stephen Coates

AT&T today announced it was donating $500,000 to the non-profit group behind Locast, the online streaming service offering free access to local TV stations in more than a dozen U.S. cities.

AT&T’s altruism is a thumb in the eye of high-cost retransmission consent agreements with the corporate owners of local free over the air television stations. AT&T added Locast’s app to U-verse and DirecTV receivers at the end of May, giving subscribers a quick and easy way to access over the air stations if one or more are “blacked out” over a contract renewal dispute. AT&T also continues to offer antennas to customers that integrate with both services’ electronic program guides so subscribers can quickly access their favorite channels.

The Sports Fan Coalition, the group behind Locast, will use the money to further expand its service into other cities. At present, Locast is available to almost one-third of American TV homes, amounting to more than 32 million potential viewers. But the service has a very long way to go to stream local stations from all 210 U.S. TV markets.

AT&T will likely use Locast as a leveraging tool when negotiations become heated, letting TV station owners know they can simply point customers to Locast to continue watching stations. AT&T cannot legally redistribute Locast TV streams to customers without running afoul of copyright law, but it can provide customers with access to the independent Locast app and the internet connectivity that allows that app to function. AT&T does not currently plan to drop local stations already on the lineup in favor of pointing customers to Locast. But it will let customers know that blacked out stations are still available to customers through the Locast app.

CenturyLink’s stock is being pummeled after the company announced a cut in divided payouts to shareholders earlier this year, preferring to keep the money in-house to reduce debt and increase spending on necessary broadband upgrades.

Last fall, CenturyLink stock was trading for over $23 a share. By January, rumors that CenturyLink was going to cut its dividend put the stock on a downward trajectory, falling to an all-time-low below $11 this month. Company officials argued that with tightening credit opportunities and increasing interest rates, the company needed to devote money normally paid back to shareholders towards paying down its $35.5 billion long-term debt and provide better service to its customers.

A half billion dollars of that money will also be spent on upgrading CenturyLink’s broadband service, particularly in rural areas where the company is receiving Connect America Fund (CAF) dollars from the federal government.

“Our plan for 2019 includes investing to improve the trajectory of the business increasing CapEx by roughly $500 million,” Jeff Storey, president and CEO of CenturyLink said on a January analyst conference call. “As I mentioned earlier those investments include expanding the fiber network, adding new buildings throughout our footprint, enhancing our enterprise product portfolio, continuing our investments in CAF-II, and transforming our customer and employee experience.”

Investors were not impressed with those plans, and CenturyLink’s share price cratered.

Independent phone companies have traditionally attracted investors with handsome dividend payouts, but the realities of their aging infrastructure and the inability to compete effectively with cable companies on lucrative broadband services have left companies like CenturyLink, Windstream, and Frontier Communications in a quandary. Shareholders do not perceive value investing in fiber optic network upgrades and punish companies that announce dramatic increases in network investments. Customers left on slow-speed ADSL networks are increasingly dissatisfied with their internet experience and seek alternative providers — usually the local cable company. As Frontier Communications has discovered, attempting to win back ex-customers has been exceedingly difficult, often only possible with lucrative promotional offers that undercut the cable company. But such offers attract customers with above-average price sensitivity, making it difficult to extract increased revenue from them going forward.

CenturyLink’s stock price has dropped to an all-time low over the last six months.

Investors are also increasingly concerned about the financial viability of investor-owned phone companies that are stuck between leveraging their old networks and facing down shareholders when upgrades become essential. AT&T and Verizon have wireless units responsible for much of the revenue earned by those two Baby Bells. Traditional phone companies have had less luck trying to sell ancillary support services like Frontier’s “Peace of Mind” technical support service, or bundling satellite TV service into packages.

CenturyLink’s Local Service Territory (Source: CenturyLink)

CenturyLink is increasingly depending on its enterprise and wholesale businesses to earn revenue. That fact has prompted some shareholders to ask why the company hasn’t spun off or sold off its traditional landline network and consumer businesses, which currently account for only 25% of its revenue. In May, CenturyLink seemed determined to placate those investors with an announcement it was exploring “strategic options” for its consumer business. Investors theorize that CenturyLink could “unlock value” from its legacy landline networks in such a sale or spinoff that would benefit shareholder value. It would also be much cheaper than investing in that network to upgrade it.

The chorus for a sale increased after Frontier Communications announced it was spinning off its landline territories in the Pacific Northwest to a company specializing in upgrading legacy networks to support better broadband. Frontier, mired in debt and facing a concerning due date for some of its bonds, made the sale to give a boost to its balance sheet. Frontier had also been facing increasing scrutiny about a potential Chapter 11 bankruptcy filing. Windstream declared bankruptcy earlier this year, reminding investors that a trip to bankruptcy court could quickly wipe out all shareholder value.

MoffettNathanson, a Wall Street analyst firm that specializes in telecommunications, finds little to like about CenturyLink shedding its own landline operations. Frontier’s sale benefited from the fact a significant part of its Pacific Northwest territory was built from an acquisition from Verizon, which had already installed its FiOS fiber to the home network in parts of Washington and Oregon. About 30% of the territory Frontier is selling is fiber-enabled. In comparison, CenturyLink has installed fiber to the home service in only about 10% of its territory, dramatically reducing any potential sale price. Much of CenturyLink’s core fiber network powers its enterprise and wholesale operations — businesses CenturyLink would likely keep for itself.

MoffettNathanson also sees little value from the proposition a buyer could leverage CenturyLink’s network to provide backhaul fiber capacity for future 5G services, because CenturyLink provides service mostly in smaller communities likely to be bypassed by 5G, at least for the near term.

Wall Street’s idea of a win-win strategy for CenturyLink is to keep its consumer business and expand its broadband service footprint and capability, if the federal government offers to cover much of the cost through more rounds of CAF subsidies. Taxpayers would subsidize broadband expansion while CenturyLink and shareholders share all the profits.

Bell (Canada) will charge its wireless customers $40 to connect a new phone-enabled device to its network, effective July 4.

Canadian wireless companies have been competing recently to see how high they can raise connection fees on their customers. In 2018, most carriers charged less than $30 to connect new devices. But in April 2018 Bell raised its fee to $30 — just the latest in a series of rate hikes. Last October, it raised the price to $35 and will now charge $40 as of next month.

To “compete,” Canada’s other large cell phone companies followed suit — both Rogers and Telus raised their prices to $35 and analysts expect them to match Bell’s new $40 fee soon. Two years ago, Bell charged $15.

Canada has three large national carriers and is home to some of the most expensive cellular plans in the industrialized world. If the Department of Justice grants the pending merger between T-Mobile and Sprint, the United States will also soon have three large national carriers, with a strong likelihood that substantial price increases and reduced value mobile plans littered with fees and surcharges will soon follow.