Event Driven Takeaways
- With high likelihood of the DOJ clearing TRCO/SGBI via a consent decree, opponents hope Congress will pressure the FCC into delaying or blocking the transaction.
- The FCC should not release a decision on the merger until the DC Court of Appeals has ruled on the pending UHF case, these opponents say.
- The multifaceted approach at the FCC and Congress aims to convince Chairman Pai that the merger is outside the public’s interest, but one opponent concedes that this outcome may be unrealistic.
Both progressive and conservative industry opposition to the Tribune/Sinclair deal is not gaining traction at the DOJ, and these opposing parties are now focusing their advocacy on the
FCC and
Capitol Hill, according to two industry sources involved in the matter.
The first source represents a conservative news outlet, and the second source works for liberal public-interest groups.
Multiple conversations indicate that the DOJ process has been relatively straightforward, with Tribune and Sinclair moving forward in divestiture discussions with the Antitrust Division. Meredith and Nexstar are rumored as potential divestiture buyers, but this could not be confirmed and neither company responded to requests for comment.
According to the first industry source, changes in DOJ leadership and other industry deals pending before the agency could contribute to delays in the antitrust review of this matter.
Currently, Thanksgiving (Nov. 23) is seen as the most optimistic date for expected DOJ clearance. A more likely timeline would extend to December or early 2018 at the DOJ, with the FCC process expected to conclude at least weeks after DOJ clearance.
Whether the antitrust review lags because of internal issues at the DOJ is open to debate.
A person close to the DOJ minimized concerns, saying there are no obvious resource constraints and that antitrust reviews subject to a second request have been conducted on the usual timeline in the Trump administration. An outside antitrust attorney largely echoed this view. To the extent there is any delay in the antitrust clearance of Tribune/Sinclair because of leadership changes at the DOJ, that delay is likely to be a matter of weeks rather than months, the attorney said.
It is unlikely the deal would be blocked outright on antitrust grounds, and remedies palatable to the merging parties are the most likely outcome of the review.
The industry sources said they have not made inroads at the DOJ and are instead focusing on the FCC, which announced on Oct. 18 a pause of the 180-day shot clock for the agency’s review of the transaction.Both industry sources characterized the 15-day pause as a small victory. The first source said the pause is “odd to say the least, specifically when Dish and others requested the original comment cycle be extended back in August.”
However, the pause is actually a routine step that the FCC takes, particularly when there are complex transactions and filings.
A spokesperson for Sinclair indicated a lack of concern, saying the FCC announcement “speaks for itself, that the FCC is seeking to compile a complete record and is offering commenters two extra weeks to review and comment on our October 5th response to the Information Request.”
On a more substantive level,
parties opposing the deal are encouraging the FCC to delay finalizing any decisions about the transaction until the agency has sorted out various policies including the UHF discount, which is the subject of ongoing litigation in the DC Court of Appeals.
“We believe that the FCC should not release a decision until the court acts,” the second industry source said. “The deal should not be slammed through in this window between the FCC’s re-adoption of the UHF discount and a potential DC Circuit reversal of that action.”
In addition to meeting directly with the FCC, opponents are trying to court Republican members of Congress to their side, hoping to marshal political pressure on the commission. “The pitch to Republicans is this merger will have a significant impact on your ability to speak with constituents and your ability to get re-elected,” the first industry source said.
On the Senate side, opponents are focused on the Commerce Committee, chaired by Senator John Thune (R-SD), and the Judiciary Committee, led by Senator Chuck Grassley (R-IA). “The concern is resonating with folks, and our ask is that they call the [FCC] chairman or that they discuss their concerns with Thune and Grassley and ask that this be reviewed more closely,” the first industry source said. Public displays of opposition from Senate Republicans are unlikely, the same source added.
On the House side, opponents are targeting the Energy and Commerce Committee and the Judiciary Committee. The House Subcommittee on Communications and Technology holds an FCC oversight hearing on Oct. 25.
The second industry source said advocacy is multifaceted, with efforts focusing on the FCC, Capitol Hill, and further recruitment of groups which could actively oppose the transaction.
“The hope is that the political pressure will grow so intense that perhaps Pai will decide that [the merger] is too aggressive,” the second industry source said.
“That may be unrealistic.”
--Ryan Lynch and Lucas Ballet