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Editorial: Sinclair issues a challenge to FCC, Powell

Oct 15, 2001  •  Post A Comment

Sinclair Broadcast Group has never been shy about testing the limits of regulatory power. But the latest maneuver by the company that pioneered the rule-bending local marketing agreement may be its most creative yet-and its most alarming.
Earlier this month, Sinclair merged the operations of two stations in Tallahassee, Fla.-its own NBC affiliate, WTWC-TV, and Media Ventures Management’s WTXL-TV, an ABC affiliate. But it left the stations with just enough autonomy to skirt federal duopoly restrictions.
The key to the arrangement was letting each station control its own programming-a simple enough gesture, but one that could signal a revolution in the television industry.
Federal Communications Commission rules generally bar broadcasters from owning multiple TV stations in a market the size of Tallahassee. But the commission’s ownership test has traditionally been whether one station is programming the other. The new Sinclair arrangement turns that test into a loophole, issuing a direct challenge to the FCC.
Understandably, Sinclair doesn’t see it that way. “Our attorneys advise us that it is not an FCC issue,” said Sinclair Executive VP and Chief Financial Officer David Amy, who defended the move in competition terms. He also indicated Sinclair is considering expanding the arrangement beyond the Tallahassee market.
Indeed, if the experiment succeeds in circumventing FCC regulations, Sinclair won’t be the only station owner rushing to consolidate. The whole industry is paying close attention to what happens next, and if the FCC fails to intervene, some insiders say the Tallahassee rationale could be used to combine virtually every station in every market.
In other words, the commission’s rules would be exposed as a joke, and the consolidation floodgates would be thrown wide open.
But with every challenge comes opportunity, and the Sinclair challenge brings with it the opportunity for the FCC to prove it is more than a paper tiger. Even with deregulation-minded Michael Powell in the chairman’s seat, the commission will have to take a strong stand on the Tallahassee situation if it hopes to retain any credibility.
The Sinclair case may provide the best indication yet of just what kind of FCC Mr. Powell intends to run. In the face of such a direct assault on his authority, it would appear he has little choice but to re-examine the existing rules and get serious about closing loopholes.
If he fails to do so, he may as well throw up his hands and admit he can no longer regulate the industry he has been charged with regulating.