Sinclair To Pay The Heaviest Penalty By A Broadcaster In FCC History

Sinclair Broadcasting Group Inc. (NASDAQ:SBGI) will pay a civil penalty of $48 million to settle federal investigations into its failed attempt to take over Tribune Media Co.

What Happened

The Federal Communications Commission announced Wednesday that Sinclair, a right-leaning media, outlet had agreed to pay the largest civil penalty involving a broadcaster to date. The $48 million will be coupled with a strict compliance plan so that the three open investigations against Sinclair are closed.

FCC Chairman Ajit Pai stated “Sinclair’s conduct during its attempt to merge with Tribune was completely unacceptable.” He said the penalty should serve as a “cautionary tale” to other licensees, but disagreed with those who for political reasons “demand that we revoke Sinclair’s licenses. While they don’t like what they perceive to be the broadcaster’s viewpoints, the First Amendment still applies around here.”

Why It Matters

The most high profile of the investigations involved misstatements to the FCC by Sinclair, reported The Wall Street Journal.

Pai blocked the Sinclair-Tribune deal on the grounds that the conservative media house’s station divestitures would still have left Sinclair in control of the stations, which is in violation of FCC rules. 

The proposed Sinclair-Tribune deal was met with criticism from Democrats who accused the FCC of going easy on media-ownership guidelines. Tribune thereafter withdrew from the deal and sued Sinclair, accusing it of not doing enough to gain regulatory approval.
Nexstar Media Group Inc. (NASDAQ:NXST) has since then acquired Tribune and emerged as the largest broadcast station owner in the United States. 

According to the FCC, the largest civil penalty imposed previously was $24 million, paid by Univision in 2007.

Price Action

On Wednesday Sinclair shares closed 2.70% higher at $15.80.