In one of the largest media consolidation acquisitions in history, Sinclair Broadcast Group has agreed to buy Tribune Media and its 42 TV stations in a $3.9 billion deal.

The transaction, expected to win easy approval by the Republican-dominated Federal Communications Commission, will virtually guarantee cable and satellite TV subscribers will pay significantly higher prices to watch Sinclair’s local television stations covering more than 70% of the United States.

Sinclair helped lay the foundation for winning approval of the transaction in GOP-dominated D.C. by hiring former Trump spokesman Boris Epshteyn as Sinclair’s chief political analyst, and Sinclair executives mandate that many of its owned stations air pro-Trump conservative political content labeled as “news stories” as part of local newscasts.

Sinclair’s conservative leanings and accusations of hypocrisy are nothing new for the station group, which has been mired in controversy for more than two decades. The “family values” image that Sinclair purports to have in its political commentaries and corporate image ran headlong into the 1996 arrest of its former CEO David Smith, who used the company Mercedes to pick up hookers in Baltimore. He was convicted of a misdemeanor sex offense. Smith cut a deal with a Maryland state’s attorney that would allow him to avoid picking up trash on the highway or cleaning community-owned pools by having his reporters air stories about Baltimore’s drug court instead.

LuAnne Canipe, a reporter who worked on air at Sinclair’s flagship station, WBFF in Baltimore, from 1994 to 1998, told Salon in 2004 she took a phone call one day about the disposition of Smith’s arrest.

“A Baltimore judge called me up,” she recalls. “He wasn’t handling the case, but he called to tell me about the arrangement and asked me if I knew about it. The judge was outraged. He said, ‘How can employees do community service for their boss?’”

To this day, Smith remains the chairman of Sinclair Broadcast Group, although he relinquished the CEO position last fall.

Canipe said the sexual shenanigans at Sinclair didn’t stop with the CEO either.

“Let’s just say the arrest of the CEO was part of a sexual atmosphere that trickled down to different levels in the company,” Canipe remembered. “There was an improper work environment. I think that because of what he did there was a feeling that everything was fair game.”

Before leaving Sinclair in 1998, she said she once complained to management about another Sinclair employee, who had engaged in audible phone sex inside a station conference room, but that no action was taken against the employee. Canipe passed away in 2016 after battling cancer.

Sinclair stations were required to air political commentary during local newscasts that favored the Bush Administration.

By 2004, the majority of Sinclair’s then-62 stations were living with corporate interference in the local newsroom. Sinclair mandates that most of their owned stations air corporate-produced political segments that are routinely called “to the [political] right of Fox News” by detractors. That year, many local newsrooms at Sinclair stations bristled over the mandatory airing of a daily televised commentary called The Point, hosted by Mark Hyman, then Sinclair’s vice president for corporate relations. The Point could be compared as Sean Hannity’s talking points delivered with the bombastic panache of Bill O’Reilly. As the 2004 election neared, Hyman’s push for George W. Bush’s re-election went into overdrive. Hyman was a fierce advocate for the Bush Administration’s intervention in Iraq and referred to the French critics of President Bush’s war strategy as “cheese-eating surrender monkeys.”

While Hyman force-fed conservative political commentaries to Sinclair stations, he did not extend that same right to others, banning Sinclair’s ABC-affiliated stations from airing an edition of Nightline that showed host Ted Koppel reading the names of U.S. troops killed in Iraq, claiming the idea was inappropriate and “motivated by a political agenda.” Concerns about political agendas were short-lived, however, because Hyman later mandated that 40 of Sinclair’s 62 stations air “Stolen Honor,” a much-criticized and highly controversial political documentary attacking Democratic presidential candidate Sen. John Kerry’s war record. The stations aired a revised version of the documentary days before the 2004 presidential election.

When management at some of Sinclair’s local stations balked at the required airing, Hyman accused them of “acting like Holocaust deniers.”

Just prior to the 2012 election, WSYX was forced to air a Sinclair-produced “special” pre-empting ABC’s 6:30pm national news and Nightline that heavily criticized President Obama, then up for re-election, and accused him of lying about the attack on the American consulate in Benghazi, Libya. The special also pre-empted programming on other Sinclair stations, including WPEC in West Palm Beach.

The implied quid pro quo with the Bush Administration was particularly important for Sinclair as it continued acquiring TV stations, a process that required the approval of the then-Republican controlled FCC. A 2004 Salon article quoted journalist Paul Alexander, who produced a widely acclaimed documentary about Kerry as “insulting to the news-gathering process. That’s not how you gather news; that’s how you blackmail people.”

But news gathering was never the point, according to former Sinclair reporter Canipe. “David Smith doesn’t care about journalism,” she said.

Smith doubled-down on his cozy relationship with the Bush Administration by allowing conservative commentator Armstrong Williams to produce unfettered extended media segments for Sinclair stations. What Smith claims he did not know was that Williams accepted a $240,000 payoff from Bush officials to promote the Administration’s education agenda in the media. Williams brazenly interviewed then Education Secretary Rod Paige, the same man who authorized Williams’ payoff.

The result of the interview, according to the 2005 Rolling Stone piece:

Even before the payoffs became public, the news staff at Sinclair was horrified. The producer who edited the interview Williams did with Paige calls it “the worst piece of TV I’ve ever been associated with. You’ve seen softballs from Larry King? Well, this was softer. I told my boss it didn’t even deserve to be broadcast, but they kept pushing me to put more of it on tape. In retrospect, it was so clearly propaganda.”

When things became politically difficult for the president during the second term of the Bush Administration, Sinclair again came to the rescue, forcing its stations to air headquarter-produced news stories highlighting “good news” about the war in Iraq. Sinclair executives also demanded each of its 62 stations air a pledge of support for President Bush.

Rolling Stone:

But within the company, current and former employees have long known that there is a fine line between ideology and coercion. Jon Leiberman, once Sinclair’s Washington bureau chief, says Smith and other executives were intent on airing “propaganda meant to sway the election.” An ex-producer says he was ordered not to report “any bad news out of Iraq — no dead servicemen, no reports on how much we’re spending, nothing.” And a producer Sinclair sent to Iraq to report on the war calls the resulting coverage “pro-Bush.”

“You weren’t reporting news,” says the producer, who spoke on the condition of anonymity. “You were reporting a political agenda that came down to you from the top of the food chain.”

At the time, Smith told visitors to his Baltimore headquarters: “There are two companies doing truly balanced news today: Sinclair and Fox.”

During the most recent election cycle, Sinclair executives made sure audiences knew where they stood, urging voters to reject Hillary Clinton, as the New York Times reported, “because the Democratic Party was historically pro-slavery.”

More recently, Sinclair has defended the Trump Administration, with orders from Sinclair HQ to stations to dig up information about an online ad that seemed to recruit paid protesters for President Trump’s inauguration in January. Various right-wing groups used the ad as evidence of organized efforts to harass the incoming administration. The ad was later determined to be a hoax, wasting reporters’ time.

The national map of Sinclair and Tribune Media’s reach. (Image: New York Times)

The interference in local newsgathering by Sinclair executives has become so pervasive, its station in Seattle – KOMO, has been rebelling by burying mandated stories surrounding commercial breaks, when viewers are most likely to tune them out. But there is little else the station can do, and like with other acquisitions Sinclair has completed, there are fewer news staffers at KOMO to protest. Standard procedure at Sinclair after an acquisition to is dramatically cut back on employees and offer more stories and content produced at Sinclair’s headquarters or at other Sinclair-owned stations.

Sinclair’s latest target — Tribune Media, owns stations familiar to most cable and satellite subscribers around the country. Among the stations in Tribune’s portfolio — WPIX-New York, WPHL-Philadelphia, WGN-TV/WGN America-Chicago, KDVR/KWGN-Denver, and KTLA-Los Angeles.

“It’s an incredible amount of power in one company’s hands,” said Craig Aaron, president of Free Press.

Tribune Media owns some of the largest local TV stations in the country.

Former FCC commissioner Michael Copps doesn’t much like the deal either, noting it is “another blow to the diversity of journalism that we should have. It’s symptomatic of what is happening in this market, which is fewer and fewer organizations controlling more and more of the information on which our democracy rests.”

Copps

With all the recent turmoil at Fox News Channel, including the cancellation of Bill O’Reilly’s show, Sinclair could use its Tribune Media acquisition to launch a new conservative national news and opinion network that could rival Fox. WGN America, which no longer has anything to do with WGN-TV — a former “superstation”, could dump the current reruns it airs and be repurposed as a new home for exiled conservative commentators like O’Reilly.

Regardless of your political persuasion, you will likely be paying a lot more for Sinclair TV stations on the cable or satellite dial. Sinclair is among the most aggressive station owners boosting prices for carriage agreements. Cable operators will continue to pass most, if not all of these fees on to subscribers in the form of higher rates or through “Broadcast TV” surcharges that are rarely mentioned by cable companies in their advertised rates.

In Utah, cable operators are already very familiar with Sinclair’s retransmission rate increases. The revenue has grown so significant, some station owner groups are buying up small independent TV stations just to cash in on the growing revenue they get from cable systems and subscribers.

CentraCom, a cable operator in Utah, reports it now pays over $10 as month for local stations, per subscriber, double what it paid in 2008, and they are prepared to see rates much higher than that in the future. Sinclair will also be motivated to force bundle its cable network Tennis Channel with its local stations when it negotiates with cable companies, whether they want the tennis network or not.

Any opportunity to paint Hillary Clinton as an out-of-touch politician rarely escapes the Beltway crowd and some of the media that covers it. Unfortunately, rural America’s broadband problems also get dismissed in the process.

After a 35-minute Hillary Clinton interview with Christiane Amanpour, one takeaway line about how the former presidential candidate felt about rural job creation was seized on by the folks inside-the-D.C. Beltway and used to mock and belittle her:

“If you don’t have access to high-speed, affordable broadband, which large parts of America do not, [large employers will overlook your town]. If you drive around in some of the places that beat the heck out of me, you cannot get cell coverage for miles. And so, even in towns — so, the president was in Harrisburg. I was in Harrisburg during the campaign, and I met with people afterward. One of the things they said to me is that there are places in central Pennsylvania where we don’t have access to affordable high-speed internet.”

As any reader of Stop the Cap! knows, those are very legitimate points. The video embedded below has several more. Available robust internet access at affordable prices attracts employers. Just ask the city of Chattanooga, Tenn.

Anyone who has traveled mountainous central Pennsylvania knows exactly what Mrs. Clinton is talking about. These communities are served by Frontier Communications and Verizon, and the best either company will offer, if you’re lucky, is basic DSL service. There are significant parts of Pennsylvania with no cable provider, and with terrain that often resembles West Virginia — another difficult-to-serve state — wireless is not so great either.

Long term rural Pennsylvanians decried the day the last analog cellular network was switched off. They routinely outperformed the digital network that replaced it in fringe reception zones. Many residents have to use indoor cell tower extenders provided by companies like Verizon Wireless and AT&T to get stable cellular reception, and many rural towns are either a total wireless dead zone or are filled with dead spots where reception evaporates.

Competition from Sprint and T-Mobile don’t mean much in rural Pennsylvania, because neither offer any reception in significant sections of the state, and AT&T and Verizon Wireless can be only nominally better in some areas.

Areas where at least 25Mbps broadband is available in Pennsylvania (Blue – Cable, Brown – Fiber) (Map courtesy of Pennsylvania Department of Community Economic Development)

So like much of the Appalachians, rural broadband is a very big problem in central Pennsylvania. Candidate Clinton proposed spending billions to augment rural broadband service, presumably by offering matching funds and grants to rural telephone companies. Although saddling rural areas with indefinite DSL service is not an ideal solution, it offers more than the Trump Administration’s apparent willingness to coddle incumbent providers with more deregulation and less oversight.

But the D.C. chattering class ignored the entire question of rural broadband problems in America and according to the Washington Post, selectively edited Mrs. Clinton’s statement into a whiny complaint she couldn’t get enough bars on her cell phone while campaigning in areas across the state where she ultimately lost:

“You cannot get cell coverage for mile,” Clinton says of the places that voted against her.

— Phil Elliott (@Philip_Elliott) May 2, 2017

Elliot is a reporter for Time magazine. If he can take her quote out of context on Twitter, is that a routine practice in Time magazine as well?

Clinton NOW talking about Pennsylvania, rural cell service. Uhhh.

— Zach Wolf (@zbyronwolf) May 2, 2017

Zach Wolf manages @CNNPolitics for the cable news channel. That does not inspire confidence in CNN.

Is @HillaryClinton adding cell coverage to “List of reasons not including myself why I lost” list? https://t.co/SaE3lzCkAm

— Clinton Soffer (@clintonsoffer) May 2, 2017

Clinton Soffer is a regional National Republican Senatorial Committee director, so his shot is at least politically predictable, but easy enough to identify as partisan.

Of course, nobody is talking about the real issue, which isn’t whether Hillary Clinton is a limousine liberal or not. It’s the bipartisan problem of downright lousy or non-existent rural broadband, a problem that incumbent providers won’t do much about unless the government arm-twists them into expansion when companies launch another merger or acquisition that needs government approval, or better yet for them, if taxpayer or ratepayer dollars help foot the bill.

At the same time this kerfuffle was going on, a private company selling VPN services decided to embark on a questionable survey asking whether Americans think broadband is a “human right” or simply a nice thing to have if you can get it.

Results of survey conducted by AnchorFree, which sells VPN services to consumers.

In April, AnchorFree surveyed an audience of over 2,000 consumers, ages 18+ about online privacy. This survey was completed online and was completely anonymous — two points that rendered it largely useless for actual opinion measurement. Online surveys are notoriously unreliable because they are heavily weighted toward those that found the survey on a website most Americans would not likely have visited, and AnchorFree offers no reliable evidence of an appropriate measurement of different demographic groups to get a properly mixed sample of opinions. In this case, we predict about 80-90% of respondents were young, male, and paranoid enough about online security to warrant shopping around for a VPN provider. But the survey does at least highlight the real issue of “not my problem” thinking that impacts on rural broadband public policy.

AnchorFree’s study asked these 2,000 visitors to its website whether they felt the internet was a “human right” or a privilege. That question was more weighted than a circus elephant, because it suggests Americans were entitled to a broadband account, presumably paid for by the government. Only one out of three respondents agreed it was “a human right.” The survey mentioned the language came from a United Nations declaration, without linking to it, which is another surefire way to get about the half the country riled up enough over the UN to stampede in the other direction.

Nobody responsible for the survey explained the premise for the UN declaration, which was first to declare broadband an extension of freedom of expression, so long as it was affordable, available, and uncensored.

It is easy to demagogue Lifeline phone service and affordable broadband as a type of welfare, as Drudge Report did in 2015.

“The Special Rapporteur underscores the unique and transformative nature of the Internet not only to enable individuals to exercise their right to freedom of opinion and expression,” according to the report’s summary, “but also a range of other human rights, and to promote the progress of society as a whole.”

It did not say broadband should be free of charge, but at least it should be available. That means just as electricity and telephone service are available today to every American that wants either or both, so should broadband.

The very thought of someone effectively paying for someone else’s broadband service went down about as well as increasing welfare benefits with survey respondents. Some people also love to make decisions on behalf of others, which is why the survey also revealed a lot of broadband selfishness. Among those who told AnchorFree broadband was only a privilege, 64% exempted themselves, declaring it was essential to them, while only 18% said it might be essential for others. How nice.

This is why it can be easy to demagogue broadband expansion programs as an unnecessary luxury. AnchorFree’s study isn’t very useful or credible on its own because the questions asked and the responses given appear in context with AnchorFree’s own agenda of peddling its products and services. Its methodology is suspect, but the results are not completely surprising.

How the rural broadband problem is framed in language can make a significant difference in how the problem is tackled. If the survey asked if Americans were in favor of guaranteed universal access to quality broadband service, the results would likely have been more favorable. Hillary Clinton’s campaign had not pledged this and her broadband platform was based primarily on spending more money to cajole phone companies to expand their networks, perhaps alluding this alone might solve the problem. It won’t for at least the last 1-2% of unserved America, because those last users will be hellishly expensive to reach. But Mrs. Clinton, and rural America, deserved something more than cheap shots about cell phone reception as part of the media’s narrative she was out of touch with rural voters. On the issue of broadband, she put her finger precisely on the problem after just visiting the area. The locals have to live with it and there are no signs this will change anytime soon.

In an interview with Christiane Amanpour at a Women for Women International event, Hillary Clinton spoke about creating jobs and the importance of access to high-speed affordable broadband in rural towns. (Women for Women International) (1:12)

So much for the “small-dollar donors” President Donald Trump touted as his biggest financial supporters. A new campaign finance report released today shows about three dozen billionaires and corporations bankrolled almost half the inauguration expenses of the president, doubling what President Obama collected for each of his two inaugurations.

Despite a campaign that promised to “drain the swamp” of corporate influence and special interests in Washington, Trump’s team accepted checks valued in the millions from individuals and companies with matters before regulators or Congress. The Wall Street Journal reports they include billionaire casino owner Sheldon Adelson, who gave $5 million; hedge-fund executive Robert Mercer, who gave $1 million; Marlene Ricketts, a member of the family that owns the Chicago Cubs, who gave $1 million; and Robert Kraft, owner of the New England Patriots, who gave $1 million.

While the Republican National Committee was concerned enough about a $250,000 contribution from Russian-American businessman Alexander Shustorovich to return it, President Trump had no reservations accepting a $1 million check from Shustorovich, who has close ties to the Putin government and various state-owned companies. Shustorovich raised alarms with national security officials who rejected some of his U.S. business deals in the past on national-security grounds.

Trump also accepted huge contributions from corporations with dealings in Washington and his Administration. Chief among the top donors was AT&T, along with Pfizer, Boeing, and Qualcomm, that all donated $1 million each. Boeing’s check arrived about a month after Trump tweet-slammed Boeing for the “out of control” cost of the new 747 Air Force One. Trump has been silent about Boeing since the check arrived. AT&T’s check may also prove a good investment if Trump abandons his commitment to oppose the AT&T-Time Warner, Inc., merger now before regulators.

The Journal reports Trump’s extravagant corporate donor list threatens to undercut the president’s message that he isn’t beholden to anyone — special interests or wealthy donors. In contrast, President Obama banned corporate funding of his 2009 inauguration. The newspaper adds, in some cases, the donations arrived days after the president selected executives at those companies to serve in his administration.

Patrick Drahi

“If he can succeed with a corporate-friendly Trump Administration and his lackey Republican legislators and regulators, Patrick Drahi’s Altice could seek to own or control up to 30% of the American telecoms market,” said A.W. Dewalle, a researcher studying Altice’s unprecedented acquisition-frenzy across the world’s telecommunications marketplace. “His IPO in the land of Uncle Sam is just the first shot and it will make a lot of executives very rich and consolidate America’s cable industry.”

Wall Street banks are clamoring for a piece of Altice’s initial public offering, announced this week. The big winners, who will split substantial fees paid to advise Altice USA, are Goldman Sachs, JP Morgan, Morgan Stanley and Citi. The IPO will allow the Drahi-controlled Altice USA to raise money for further acquisitions in the United States and to potentially restructure its existing debt, run up acquiring Cablevision and Suddenlink.

Reuters reported that Drahi’s biggest U.S. shareholders — BC Partners and the Canadian Pension Plan Investment Board will use the IPO as an opportunity to sell some of their combined 30% stake in Altice USA, giving Drahi further assurance he will stay firmly in control of the American operation as he takes on new investors.

Les Echos reports Drahi’s pattern is a familiar one for a man in a hurry to take a much bigger stake in the American telecom market, where profits are high and competition is relatively low. By raising additional funds, Altice USA can show financial strength as it appeals to bankers to loan it the billions in will need to acquire existing cable (and potentially phone) companies. If Altice uses some of the money to repay its existing $20 billion U.S. debt, that could also win the company favorable interest rates on its future loan portfolio.

Drahi is an acquisition specialist, having bought more than 30 companies to add to his Altice portfolio since its start in 2002. Low interest rates, favorable banking terms and corporate deregulation have fueled the shopping spree. With the election of Donald Trump in the U.S., Altice is convinced the sky is the limit when it comes to mergers and acquisitions.

“Everything about his government and the people he has put in place at regulatory agencies says deregulation, ‘laissez-faire,’ and consumers beware,” said Dewalle, a point echoed in part by the Financial Times.

The election of Donald Trump has lifted expectations among chief executives that it will be easier to consolidate companies in the telecoms, media and technology (TMT) sector, as the Republican president has a more laissez-faire approach towards competition. Many media and telecom players are under pressure to boost margins and find new growth avenues, while facing declining sales, according to a senior banker in the industry. “M&A might be the only option for many companies in this sector and Altice will certainly try to play a big role in this,” said [one] banker.

Altice is already laying the public relations groundwork to convince skeptical legislators and regulators that an Altice buyout is not bad news for customers. Altice is spending millions to scrap Cablevision’s existing hybrid coax-fiber network for a 100% fiber to the home replacement. Other upgrades are also ongoing across Suddenlink’s footprint.

Because the American telecom marketplace is not nearly as competitive as the one Altice faces in Europe, Americans are accustomed to paying for broadband and television services at prices that would be scandalous in France. The excess profits earned in America can help Altice finance fiber upgrades in its more competitive European markets. Altice confirmed this week it planned to invest more in 4G wireless upgrades for its SFR division in France and will cover 22 million French homes with fiber to the home service by 2022 and 5.3 million homes in Portugal by 2020.

How big will Mr. Drahi seek to get in the United States? He testified before the Economic Affairs Committee of the French Senate last June, telling legislators he owns or controls about one-third of the French telecom market. In the United States, he controls just 2%, leaving plenty of room to grow.

French business experts predict Drahi will initially seek to sweep up the remaining independent cable operators in the States into the Altice empire before turning attention to a big player like Comcast or Charter Communications, the largest and second-largest American cable operator respectively. Publicly traded companies like Cable ONE would be the first prime targets for an Altice buyout. But Drahi could also repeat his Cablevision acquisition by offering a premium price for privately held operators like Cox Communications, which has a presence in larger cities, and Mediacom — which provides service in 23 states and has a big presence in the midwest.

Most of the rest of America’s independent cable operators are small, regional operations serving smaller communities. Drahi has his choice of these kinds of operators that include Adams Cable, Armstrong, Atlantic Broadband (owned by Canada’s Cogeco), Blue Ridge Communications, Buckeye Broadband, Hargray, Midco, Northland, Service Electric, TruVista, Wave Broadband (exploring a sale), and WOW, among others.

Thus far, Drahi has not shown much interest in acquiring telephone companies, so analysts expect him to confine his acquisitions to the cable business. Even if Drahi acquires a substantial cable portfolio in the United States, he will argue he still faces competition from telephone companies in those same service areas. What Drahi won’t do is compete from the ground up by building a competitive cable system to face off against a firmly entrenched American duopoly.

“That would be bad for business,” said Dewalle.