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

STIRR, Sinclair Broadcast Group’s new free-to-stream, advertiser-supported service, this week added Dan Abram’s Law and Crime Network to a growing lineup of second-tier networks airing off-network shows, YouTube videos, movies, oddities like drone footage, and local news content produced by Sinclair-owned television stations around the country.

As of today, STIRR features 29 streaming linear TV networks, most you’ve never heard of before. The primary draw for most will be access to live streaming news from dozens of Sinclair stations around the country. STIRR asks users to pre-select the city and station nearest them, which then allows access to STIRR CITY, a channel that carries complete coverage of local news and features produced by that Sinclair station. In between live newscasts, the channel features a small handful of off-network shows like Highway to Heaven (commercial free for some reason) and live carriage of Cheddar, a business news network. Users can choose and change any Sinclair station they like anytime, useful during breaking news stories several cities away.

Although STIRR incorporates plenty of its cohesive platform branding messages across its lineup, it is clear most of the included networks are a motley crew of independent thrown-off-cable misfits, low-budget oddities that feature little more than drone footage or a queue of YouTube videos, and several digital subnets you probably have encountered on over the air channels. Most of the latter air old off-network shows from the 60s, 70s, and 80s, similar to Me TV. But none seems compelling enough to replace a cable TV or streaming TV subscription.

STIRR is only a few months old, and lineup additions and changes are forthcoming as the service grows to around 50 live/linear TV channels by the end of 2019. Streaming quality is good, but older programs show their age. Sinclair likely bought a range of cheap syndicated series to scatter across its own STIRR-branded channels, and many inexplicably run without commercials, which means viewers are often treated to several minutes of “we’ll be right back” billboards between shows. Sinclair presumably would like to sell its own advertising on the service, but so far the vast majority of commercials are unpaid promos for different STIRR shows and channels.

A rudimentary program guide offers viewers the titles of shows, but few descriptions. STIRR does not offer a record option at this time.

Current STIRR Lineup

1. STIRR CITY
2. Stadium
3. Cheddar News
4. Law & Crime Trial Network
5. Futurism
6. Dust
7. Comet
8. Charge!
9. CONtv
10. Buzzr
11. Dove Channel
12. Shout TV
13. Pet Collective
14. TBD
15. FailArmy
16. The T from The Tennis Channel
17. WPT – World Poker Tour
18. STIRR Sports
19. Outdoor America
20. STIRR Life
21. BigLife TV
22. GustoTV
23. MovieMix
24. STIRR Movies
25. Gravitas Movies
26. Mobcrush
27. ESR eSports Channel
28. NASA TV
29. SOAR (Drone Footage)

STIRR is available from iOS and Android apps, on Amazon Fire TV, Apple TV, and Roku, and on desktops through the STIRR website.

Pai

Despite the potential for a Democratic Party takeover of the U.S. House of Representatives that is likely to usher in a new era of more aggressive oversight of the Republican-dominated Federal Communications Commission, current chairman Ajit Pai “plans to lead the FCC for the foreseeable future.”

Multichannel News reports Pai is unlikely to leave his post just two years after being appointed to the position by President Donald Trump, despite an ethics controversy over alleged assistance given to Sinclair Broadcast Group to allow the company to acquire more stations despite a federal ownership cap on the number of stations that can be owned by a single entity. Pai also was responsible for a highly controversial decision to cancel net neutrality provisions enacted during the Obama Administration.

“Chairman Pai remains focused on his key priorities, including bridging the digital divide, fostering American leadership in 5G and empowering telehealth advancements,” said Brian Hart, director of the FCC’s office of media relations.

Should both the Senate and House flip to Democrats in next week’s midterm election, Pai’s agenda of deregulation, media consolidation, and elimination of many Obama-era consumer protections would be in peril and subject to determined Congressional oversight.

Pai has taken heat from consumer groups for ending a set-top box competition program that could have forced television providers to accept equipment obtained competitively in the retail market. He also faced criticism for reinstating a program giving UHF TV station owners the opportunity to acquire more stations, directly benefiting Sinclair and allowing it to pursue its since failed merger with Tribune Broadcasting.

Sinclair Broadcast Group, America’s largest owner of local TV stations, will shortly launch a new ad-supported streaming service called Stirr that will incorporate local news from Sinclair TV stations, conservative political commentary, and syndicated entertainment shows and movies.

There is no word yet exactly when the service will launch or whether a subscription fee will be charged, but Sinclair intends to use the power of its large stable of local television stations to heavily promote the service to consumers.

Stirr will be based in Los Angeles and Seattle. The Sinclair-owned Tennis Channel is providing technical and operational assistance to get the service launched in time to compete with the forthcoming subscription service from Fox News Channel – Fox Nation, which is targeting a similar audience.

Sinclair stations license a significant amount of syndicated programming. Sinclair hopes this will help convince content owners to license their shows for streaming on the forthcoming Stirr app.

Sinclair will also be able to offer subscribers 24/7 access to local newscasts and news clips, as well as content produced at its Baltimore headquarters. Much of that corporate-produced content is political commentary that has historically been very supportive of President Donald Trump and the Republican Party, and very critical of the Obama Administration and Democrats generally. Commentators like Mark Hyman and Boris Epshteyn, a former Trump campaign manager, are required to be carried on Sinclair owned stations.

Tribune Media walked away from its $3.9 billion dollar merger agreement with Sinclair Broadcast Group this morning, and announced it would sue Sinclair for $1 billion for its conduct trying to get the deal approved, including withholding information and deceiving regulators.

The merger deal was controversial from the moment it was announced, pairing up Sinclair’s 192 stations with Tribune’s 42 TV stations in 33 markets, including well-known stations like WGN in Chicago and WPIX in New York. Sinclair was already the nation’s top TV station owner, and to acquire more stations, Sinclair would have to get TV ownership limits eased, something coincidentally provided by FCC Chairman Ajit Pai, who suddenly announced an interest in bringing back a “discount” on ownership caps for stations broadcasting on the UHF band. That policy was dropped after the country moved to digital over-the-air broadcasting, which negated the perception that UHF channels were less desirable and held lower value than lower VHF channels because of reception quality.

Sinclair’s Long History of Partisan Politics

Sinclair, unlike other TV station owners, also has a long history of being active in partisan politics, airing programming in favor of conservatives and openly advocating for the agendas of the Bush and Trump Administrations. Its long-standing policy to require its stations to air corporate-produced news segments and commentaries during local newscasts has irritated local newsrooms for years, but as the number of Sinclair-owned stations has grown, the practice was eventually exposed with a viral video depicting an uncomfortable collection of anchors from dozens of Sinclair stations decrying “fake news.”

In 2016, Sinclair aired 1,723 stories about the Huntsman Cancer Institute in Utah on 64 of its stations. Most were designed to look like one or two minute news stories, although Sinclair also produced a 30-minute show about the facility. What viewers were never told is that the stories were paid for by the Huntsman Cancer Foundation. In December, the FCC fined Sinclair a record-breaking $13.3 million for failing to disclose the story’s sponsor. The Democratic minority on the Commission called that a slap on the wrist and wanted the maximum fine of $82 million levied on Sinclair for its egregious and flagrant violation of FCC rules.

Sinclair’s past run-ins and controversies guaranteed its merger deal with Tribune would receive special scrutiny. The documents attached to the lawsuit filed this morning reveal Tribune got quickly upset with Sinclair’s hardball lobbying, accusing Sinclair of brazenly flouting the FCC’s rules and setting up the merger for failure.

In the end, even Sinclair’s apparent ally Ajit Pai distanced himself from the TV station owner in July, suddenly advocating the merger deal be forwarded to an administrative law judge for review, a sure sign the merger was in serious trouble with regulators.

How America’s largest local TV owner turned its news anchors into soldiers in Trump’s war on the media: https://t.co/iLVtKRQycL pic.twitter.com/dMdSGellH3

— Deadspin (@Deadspin) March 31, 2018

Tribune Takes Sinclair to Court

This morning, Tribune officially pulled the plug on the merger.

“Our merger cannot be completed within an acceptable time frame, if ever,” Tribune Media chief executive Peter Kern said in a statement. “This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the merger agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”

That accountability will come in the form of its lawsuit that includes revealing documents about Sinclair’s behavior during the merger process, which includes allegations Sinclair recklessly withheld information and deceived the FCC and Justice Department about the transaction. If true, that could threaten Sinclair’s fitness to hold FCC licenses for its TV stations.

“From virtually the moment the Merger Agreement was signed, Sinclair repeatedly and willfully breached its contractual obligations in spectacular fashion,” Tribune said in its lawsuit. “In an effort to maintain control over stations it was obligated to sell if advisable to obtain regulatory clearance, Sinclair engaged in belligerent and unnecessarily protracted negotiations with DOJ and the FCC over regulatory requirements, refused to sell stations in the ten specified markets required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay – all in the service of Sinclair’s self-interest and in derogation of its contractual obligations.”

Tribune claims Sinclair only favored its own financial interests, not the obligations it had to Tribune to get the merger deal approved as quickly as possible. Tribune also accused Sinclair of threatening, insulting, and misleading regulators to keep control over stations it was obligated to sell.

The Sinclair Broadcast Group has come under fire following the spread of a video showing anchors at its stations across the United States reading a script criticizing “fake” news stories. (8:03)

“Sue me.”

Tribune’s executives gradually became more alarmed the more Sinclair negotiated with regulators, claiming Sinclair antagonized officials at the Justice Department. Tribune notes the assistant attorney general of the antitrust division got an earful from Sinclair, lecturing the official that he “completely misunderstand[ood]” the broadcast industry and was “more regulatory” than any recent predecessor.

When Sinclair was cornered by the Department of Justice over demands for station divestitures, the company summarized its position in two words: “sue me.”

Tribune pointed out the Justice Department was prepared to accept the merger with the appropriate stations being sold to new owners, but Sinclair balked. After a series of schemes were suggested to partly divest the stations, Tribune saw the protracted negotiations as unnecessary and imprudent. The agendas of both companies were radically different. Tribune wanted Sinclair to do whatever the FCC and Justice Department insisted be done, to get the deal done quickly. Sinclair wanted the deal and a way to maintain control, even indirectly, over almost every station involved in the deal. Tribune began threatening to sue Sinclair if it did not agree to the Justice Department’s terms.

Tribune’s growing unease with Sinclair’s behavior culminated in this email exchange between Tribune and Sinclair executives in late December, 2017.

Sinclair finally relented in February, 2018, but only partially. Exasperated Tribune executives were stunned as Sinclair now proposed to sell stations to third parties that maintained “significant ties to Sinclair’s executive chairman,” David Smith, or his family.

“Sinclair would effectively control all aspects of station operations, including advertising sales and negotiation of retransmission agreements with cable and satellite operators,” Tribune said in its lawsuit. “Under these proposed arrangements, Sinclair would continue to reap the lion’s share of the economic benefits of the stations it was purportedly ‘divesting’ and would have an option to repurchase the stations in the future.”

“Sinclair fought, threatened, insulted, and misled regulators in a misguided and ultimately unsuccessful attempt to retain control over stations that it was obligated to sell,” the lawsuit concludes.

The country’s largest owner of local TV stations, the Sinclair Broadcast Group, which reaches over a third of homes across the nation, wanted to get even bigger by merging with the Tribune Media Company. Sinclair is raising concerns among media watchers because of its practice of combining news with partisan political opinion. William Brangham reports for PBS Newshour. (8:58)