Making decisions on corporate mergers is one of the more consequential responsibilities of a regulator. I know, having made those decisions as Chairman of the Federal Communications Commission from 2013 to 2017.
Now the Trump FCC has before them the question of Sinclair Broadcast Group’s $3.9 billion proposed acquisition of Tribune Media. It is a major decision, since the resulting broadcast behemoth would hold as many as 233 local television stations reaching into more than 70 percent of American homes. Allegations about the Trump administration’s closeness to Sinclair – including Jared Kushner’s campaign deal with them – have been made. All I know is what I read, but the lead up to the actual decision has been significant and seems to presage approval.
I’ve previously written how the Trump FCC has been strategically knocking down all the regulatory barriers to Sinclair Broadcasting becoming a national goliath. First, the FCC changed the rules so that some stations are counted at only half their reach – using funny math to comply with Congress’ mandate that no single broadcaster should control access to more than 39 percent of American households. Then, the FCC proposed eliminating the requirement that each licensee maintain a local studio, doing away with the concept that broadcasters perform an important public service by delivering local news and information over the people’s airwaves. Finally, the commission eliminated the prohibition on a favorite trick of slick lawyers: that total management control and appropriation of profits of a television station doesn’t constitute effective ownership, and thus avoids Congress’ cap.
The statutory basis underpinning an FCC merger decision is clear: is the transaction in the “public interest”? Since the “public interest” is one of significant discretion for the agency, the regulator’s responsibility is the establishment of the relevant facts, followed by a fact-based decision. For major transactions during my tenure, we would bring on a special team of legal and economic experts to augment the FCC staff’s efforts to delve into the facts.
The other requirement of a FCC decision is that it be made on the record developed through public input. The Sinclair merger has built an interesting record of opposition from strange bedfellows. From the left of the political spectrum, groups such as Public Knowledge and Free Press worry about consolidating corporate power in the media. They’ve been joined by corporations such as DISH Network and the American Cable Association that worry about Sinclair’s marketplace muscle.
But what is most interesting is the record being built by those media outlets that traditionally support the Trump Administration. Conservative media outlets have raised what are usually liberal concerns about a huge new broadcast outlet squeezing out the market for independent voices. Newsmax, whose founder Chris Ruddy has occasionally asserted himself as a spokesperson for the president, has filed comments telling the FCC not to approve the merger. “The level of media concentration proposed by this transaction will homogenize the content available to U.S. consumers, eliminate unique viewpoints and reduce press diversity, especially in the delivery of local news,” Newsmax argued. Glenn Beck’s network, The Blaze, and One America cable network are other conservative media that have similarly raised red flags.
So what is the Trump FCC to do? The politics of the decision are now muddled, but politics shouldn’t be the basis for decisionmaking anyway.
The statutory test for the FCC’s decision – and the only test Congress has instructed the commission to use – is whether the merger is in the “public interest.” The corporate interest of Sinclair is obvious; they may be a politically friendly company, but whether they meet the public interest test is now even being challenged by others of the same political stripe.
Not to be lost in the decisionmaking is the statutory rationale behind broadcast licenses in the first place. In the belief that broadcasting is a public trust, broadcast companies have been given use of the public’s airwaves. The key to that public trust is providing news and information to the local community of license, a concept that appears in danger by the one-two punch of the FCC’s elimination of the local studio requirement and the national network designs of Sinclair.
Ultimately, the decision comes down to the record in the proceeding. The richness of the record on this matter would suggest that even though the Trump FCC has bent the rules to facilitate such a merger, it is not in the public interest.