FCC Probing Sinclair For Possible 'Lack of Candor'

The FCC is investigating whether Sinclair Broadcast Group Inc. misled the government agency during its unsuccessful attempt to buy Tribune Media Co. last year, reports The Wall Street Journal.

In a June 25 letter to Sinclair, the FCC said it is investigating whether the nation’s biggest owner of local television stations “engaged in misrepresentation and/or lack of candor” with the agency when it was seeking approval for the $3.9 billion deal.

The FCC’s concerns about the deal last spring led Tribune to pull the plug on the agreement.

Nexstar Media Group Inc. then stepped in last December and bought Tribune in a deal valued at $4.1 billion that is still pending FCC approval.

If the FCC determines that Sinclair did deceive the agency, it can order a hearing on the matter. An FCC hearing could lead to significant fines or even the possible loss of broadcast licenses, although such extreme actions are infrequent.

The government probe into Sinclair comes as the company is in the midst of acquiring 21 regional sports channels from Walt Disney Co. for more than $10 billion. That deal requires the approval of the Justice Department.

In the letter, the FCC said it is investigating whether Sinclair’s proposed plans to spin off stations to comply with FCC regulations and receive approval of the Tribune deal would have in fact left the broadcaster in de facto control of the stations.

In the letter, the FCC said Sinclair has until July 9 to respond, warned that “to knowingly and willfully make any false statement or conceal any material fact in responses” to its inquiry is “punishable by fine or imprisonment as well as a violation of the Communications Act.”

One such transaction involved Tribune’s WGN-TV Chicago, which Sinclair said it would sell to car-dealership operator Steven Fader for $60 million. Not only was that price considered far below the station’s value by industry analysts, but Sinclair Chairman David Smith sits on the board of a car-dealership concern where Mr. Fader is chief executive.

The FCC wants similar details about Sinclair’s proposed plans to transfer TV stations in Dallas and Houston to Cunningham Broadcasting, which is run by the estate of Mr. Smith’s mother, Carolyn Smith.