Delayed twice now, the proposed sale of a local TV broadcaster faces a big test this week.
Regulators are deciding whether to clamp down on a loophole that's allowed companies to skirt government rules and acquire multiple stations in one market.
It's a safe bet that Sinclair Broadcast Group will be watching the action closely.
The Maryland company has exploited the end-around for years, with the tacit approval from the Federal Communications Commission. Locally, it's used the opening to gain control of two TV stations since 1998. And until recently, it was seeking to add a third.
Sinclair badly wants to buy Mount Pleasant-based ABC affiliate WCIV-TV 4 under a $985 million deal that includes six other stations in other cities.
When it announced the deal in July, Sinclair said it expected approval by the end of 2013. The closing has been pushed back to as late as June 30, partly because government antitrust lawyers have been asking for more details.
Sinclair at first called the review routine, but this month it moved aggressively to appease regulators.
Originally, Sinclair wanted to buy WCIV outright. It also would control WTAT-TV 24, the Fox affiliate in North Charleston, through a closely affiliated business. Furthermore, Sinclair said it had planned to sell but continue running a third local station, MyNetworkTV carrier WMMP-TV, under a deal it had arranged in advance with a friendly buyer.
Then the broadcaster began feeling some serious political heat over its use of "sidecar" businesses to circumvent rules barring one company from owning multiple TV stations in smaller markets. That's enabled Sinclair to expand into a national powerhouse.
CEO David Smith defended the strategy in October.
"To set the record straight, every transaction we have entered into completely complies with the law and the regulations of the FCC, and where required, as was true in most cases, were approved by the FCC after full disclosure of each aspect of our transactions," Smith said in a statement.
Sinclair also has said all of the agreements in the deal to buy Channel 4 and the other stations "are squarely within the boundaries of what the commission has repeatedly approved in the past."
It has since sounded a less defiant tone. To get the WCIV deal approved, the company said this month that it would sell WMMP to an unaffiliated buyer and cut all business ties with the station.
It also said it would stop running WTAT, though it would effectively still own the Fox station through a sidecar company that's controlled by Sinclair CEO Smith and his family.
Supporters of Sinclair argue that the FCC ownership limits are outdated, citing the growing competition TV broadcasters face from the likes of Netflix and other new rivals. They also contend that in smaller markets, the sidecar deals enable stations that would likely fail to remain on the air.
Opponents aren't convinced. The American Cable Association said its members would be harmed by the WCIV deal because the local Fox and ABC stations could work together when negotiating fees with cable and satellite carriers that want to retransmit network programming. Those charges, in turn, are passed on to consumers.
Regulators, meanwhile, are concerned about abuses that can crop up when multiple TV stations employ one sales force to sell their airtime. FCC Chairman Tom Wheeler, a Democrat who took office in November, is proposing to crack down on such "joint sales agreements."
The big concern for Sinclair is that its sidecar strategy will be outlawed, requiring it to unwind all previous deals in as little as two years.
The company could get an answer as soon as Monday, when the FCC is expected to vote on the issue
Contact John McDermott at 937-5572.
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