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The Realpolitik of the Sinclair-Tribune Merger

The controversy behind the Sinclair Broadcast Group’s $3.9 Billion cash and stock agreement to acquire 42 broadcast stations and other media assets from Tribune Media continues to swirl. If approved, the combined media entity will reach 72% of US households, a figure far beyond the 39% allowed by Congress.

Adding fuel to the controversy is that far-right-leaning Sinclair Broadcasting only became compliant with the ‘39% Congressional rule’ when FCC Chairman Ajit Pai, an appointee of President Donald Trump, reinstated the UHF discount rule enabling Sinclair to count only half of its actual audience based on the premise that UHF has a weaker signal than the VHF band.  The reality is that, since the move to digital TV, signal issues are a thing of the past, rendering the UHF rule obsolete.

So, what’s going on here, and what does it tell us about the future of TV?

Let’s Be Real
One cannot dispute that President Trump knows media, or that having a steadfast political ally like Sinclair (reaching over 70% of TV viewers) is a most powerful weapon. No doubt Sinclair will continue to work in lock step with the Trump agenda, as it has since the 2016 Presidential campaign. Were a Democratic administration in power and, instead of Sinclair, a far-left leaning media organization in play, we’d express the same concerns. But this is not about party –- it’s about power.

While there are numerous historical examples of the press pushing an agenda in support of or in opposition to a Presidents’ wishes, there always seemed to be a perceived separation between the Executive Branch and the Press. The move to reinstate the UHF discount by President Trump and Mr.Pai was so overt in its construction, that it served to magnify the reaction of both Trump supporters and critics, and likely sent a message to the ‘mainstream press’ that he did not fear them.

One impact of this merger is immune to hyperbole—that is, its impact on local news. We have already seen national news become more opinionated and infotainment in tone, but with Sinclair expanding its influence, your ‘local news’ will likely to be less local and more opinionated in its delivery.

Where Sinclair has a Valid Point
Sinclair’s argument that the competitive television landscape has changed and consolidation is necessary to compete is valid. The distribution mechanisms of television as we know it today are rapidly fading. The proliferation of OTT, SVOD, and other ‘cord cutting’ options mean a more democratized media environment. The days of the traditional ‘channel-based’ television are slowly coming to an end. Ironically, it is this point that renders the $3.9 Billion Sinclair-Tribune deal irrelevant in the long run.

Calling People Out
While many will try to take ideological sides on this issue, a fair debate begins with honest perspective. Below is a list calling out several false arguments and those groups exacerbated the problem.

  1. Anyone who tries to defend the re-instatement of the UHF Discount rule. The fact is that the rule was obsolete and brought back to cynically serve a political purpose.
  2. “The sky is falling!” The loudest critics claiming that Sinclair will have excessive market power, crush the competition, destroy democracy, and other hyperbole happen to be those organizations that are aggressively trying to preserve their own economic interests.
  3. Tribune executives. Rather than stand on principal, they remain silent about the deal because they stand to gain a lot of money should a successful merger happen. Sadly, many regular Tribune and Sinclair employees stand to lose their jobs, as overlaps and the labor-minimizing efficiencies become the norm.
  4. The American people. Largely oblivious to how this will impact their local news, US viewers could very well see their community, their nation, and their world through an extremist filter. It is this indifference that enables political officials to take advantage of the situation and skirt the rules to help their cause.
  5. FCC Chairman Ajit Pai and Commissioner Mike O’Reily. Appointed to serve the best interests of the American people, they instead chose to rule in favor of a far-right political agenda.

Economic and political realities make it inevitable that the Sinclair-Tribune Merger will be approved. If the merger happens, short-term impacts will not be as dire as opponents predict. However, as time progresses, the lack of competition in local TV will inevitably lead to job loss, lower quality programming, and higher cost to consumers.

The question that should be asked is this: Is Sinclair making a wise decision in investing in $3.9 billion in dying distribution model?

Rob Silvershein is a Senior Advisor for TDG and 20-year veteran media executive. He lives near Los Angeles, CA.