The Sinclair "Sidecar" Deals Raised the Red Flag
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Yesterday, FTVLIve told you that the FCC is having some "serious concerns" over the Tribune deal and those concerns could torpedo the entire deal.
It seems that the biggest problem is Sinclair's wanting to use "sidecar" deals to not own, but run other stations.
In other words, say you bought 10 TV stations and the FCC said it would only approve you owing 8 stations and you would have to sell off 2 of them. But, you're really selfish and you want all 10.
So, you call up your friend Steve and tell him that he can buy one of the stations for $100 bucks, but that you will still run the station and make all the decisions. You will throw Steve a few bucks as the station makes money and Steve doesn't have to do a damn thing other than "act" like the station owner.
Then you make the same deal with your friend Amy for the other station. Amy does nothing, makes money and you still run and control the station that the FCC did not want you to run.
That is a "sidecar" deal in a nutshell, and that appears what the FCC has questions about with Sinclair.
Al Tompkins writes for Poynter's website, Sinclair offered to sell stations where it would be holding more than one license but it would continue to operate some of those stations under a management agreement. An April Wall Street Journal story said, "Under the plan submitted to the FCC last month, Sinclair said it would sell WPIX-TV New York to Cunningham Broadcasting Corp. for $15 million and WGN-TV Chicago to Steven Fader for $60 million. Both purchasers have long ties to Sinclair and its executive chairman, David Smith."
In March, The Chicago Tribune pointed out the connection between Fader and Smith, "The licensee of WGN would be a newly formed company headed by Steven Fader, a longtime business associate of Sinclair Executive Chairman David Smith. Sinclair will have an option to buy back the station for the same price, subject to adjustments, within eight years."
Similarly, the Tribune said, the sale of WPIX in New York City has close ties to Smith. "Sinclair filed a similar application to sell WPIX to Cunningham Broadcasting Corp. for $15 million, with an option to buy it back, and an agreement to provide advertising sales and programming to the station. Cunningham Broadcasting is owned by the estate of Carolyn Smith, the mother of the Sinclair chairman."
These so-called "side-car" agreements appear to be what Ajit Pai is most concerned about. Sinclair proposed to "sell" the stations but would still operate the stations. That would allow Sinclair to duck the FCC's ownership limit, but run the station's news and sales operations. It is a fairly common local television practice these days, but given the high-profile nature of the Sinclair purchase and the size of the deal, the FCC is balking and wants what the Journal calls "more distance more distance between Sinclair and the would-be owners of the properties."
So, will the Sinclair deal still happen? Some think it is dead and the FCC and the DOJ have grown tired of the company's antics.
But, Sinclair is very greedy and they have a very good friend in the White House that wants them to help spread his message. Don't count out Sinclair just yet.
One thing is for sure, the people that have spoken out over and over again against Sinclair have been heard and they rattled enough cages to get Ajit Pai to somehow grow a backbone and stand up for what's right.
We'll see if it lasts?
