Monday, December 9, 2013

FCC Asks SBG For Revisions On 'Sidecar' Plans

The Federal Communications Commission on Friday asked Sinclair Broadcast Group Inc. to amend or withdraw its plans to use so-called sidecar companies as part of its acquisition of Allbritton Communications Co.'s TV stations, an unusual level of scrutiny for a tactic that has helped fuel broadcast-industry consolidation, according to

In the Allbritton deal, Sinclair proposed to spin off several stations into separate entities known as sidecars, a move that would allow it to sidestep FCC rules governing the number of stations a broadcaster can own in a particular market.

Such arrangements are becoming more common in the industry. Sinclair pioneered the maneuver two decades ago and it has helped the company become the largest station owner and operator in the country, by number of stations. But critics have raised questions about the tactic, arguing that Sinclair operates and effectively controls the sidecar companies.

The heightened scrutiny represents a shift for the FCC. "In the past, the commission staff has been very acquiescent with respect to these kinds of arrangements," said Andy Schwartzman, a lawyer and advisor to anti-consolidation advocacy group Free Press.

Sinclair agreed in July to buy the group of eight stations owned and controlled by the Allbritton family, including the Washington, D.C., ABC affiliate WJLA, for $985 million. The deal would put Sinclair over the FCC's ownership cap in three markets where it already had holdings—Charleston, S.C., Birmingham, Ala., and Harrisburg, Pa.,—but the company filed plans with the FCC to spin off stations in those markets to sidecars.

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