June 25, 2019

Sens. Warren, Sanders, Booker Urge FCC and DOJ to Review Sinclair Broadcast Group's $10.6 Billion Acquisition of 21 Regional Sports Networks

Media giant's acquisition will likely lead to increased prices for consumers and raises concerns given Sinclair's history of forcing local stations to relay partisan political messages

Washington, DC - United States Senators Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), and Cory Booker (D-N.J.) sent a letter to Federal Communications Commission (FCC) Chair Ajit Pai and the head of the U.S. Department of Justice (DOJ) Antitrust Division, Makan Delrahim, urging close scrutiny of Sinclair Broadcast Group, Inc.'s (Sinclair) recent acquisition of 21 Regional Sports Networks and Fox College Sports (RSNs) from the Walt Disney Company in a deal valued at $10.6 billion. The acquisition is not finalized and has yet to be approved by the FCC and DOJ. The senators asked the agencies to closely scrutinize the deal prior to approval. They expressed concerns that the deal may result in increased prices for consumers, reduce competition in the industry, and enhance the media giant's ability to force its partisan political messaging on millions of Americans.

As one of the largest local television station operators in the country, Sinclair owns and provides services to 191 television stations that broadcast 605 channels in 89 markets. Sinclair also has a stake in a streaming network that offers live college sports coverage and has an exclusive partnership with the Chicago Cubs to televise their games. Its local stations reach 39 percent of American Television households, the maximum allowed by FCC broadcast ownership rules, which were established to preserve decentralized media markets and discourage anticompetitive behavior.

Allowing Sinclair to increase its market power will enhance the company's ability to force channels onto cable distributors, potentially resulting in even higher prices for consumers. Sinclair and other station owners pass fees that RSNs are obligated to make to sports teams onto cable distributors, which then impose multi-channel packages -- or bundles -- onto consumers. This is a particular concern as Sinclair attempts to purchase almost two dozen regional sports networks, given that the limited number of un-bundled live sport streaming options available to consumers leave "sports fans...tethered to their cable bundle."

Moreover, this bundling is dangerous because of Sinclair's history of using the airwaves for partisan purposes, as Sinclair has demonstrated over the last few years by circulating several concerning must-run programming directives to its local news stations, including a "two-minute commentary defending the use of tear gas on migrants at the border."

"This acquisition raises serious questions about the effects such a deal would have on competition in the industry, prices for consumers, and the diversity of perspectives in local media and sports content," wrote the lawmakers.

Given Sinclair's history of attempting to skirt FCC rules, its current dominance over local television broadcasting, and its power in sports broadcasting, the senators urge the DOJ and FCC to review Sinclair's recent acquisition of 21 RSNs from Disney and the effects it would have on consumers.

In 2016 remarks, Senator Warren warned against market consolidation: "...when companies consume their rivals instead of competing with them, consumers can get stuck with few or no alternatives. Prices go up, and quality suffers."