The fiery editorials of Sinclair Broadcast Group Inc. chief political analyst Boris Epshteyn will be beamed into seven in 10 American living rooms if the company is allowed to complete a merger that would transform it into a nationwide conservative TV juggernaut.
But Sinclair's proposed $3.9 billion purchase of Tribune Media Co. is encountering opposition from unlikely foes: media stalwarts of the right.
Newsmax Media Inc., headed by friend-of-Trump Chris Ruddy, One America News Network and TheBlaze, founded by former Fox News host Glenn Beck, are joining liberals in criticizing the merger.
Sinclair in May announced a deal to buy the Chicago-based Tribune to expand its reach of American homes to 72 percent. The merger would give the once-obscure Maryland broadcaster a presence in major markets including New York and Los Angeles, forming a conservative TV giant rivaling Rupert Murdoch's Fox News empire.
That would enlarge the platform of Epshteyn, a former special assistant to President Donald Trump who often spoke on behalf of the campaign in media appearances and coordinated other surrogate operations.
Before that can happen, the companies need approval from the U.S. Federal Communications Commission and antitrust officials at the Justice Department. Opponents, including Ruddy, say the deal would violate regulations that limit a station owner to reaching no more than 39 percent of American households.
Letting Sinclair bust through long-established restrictions "will be destructive to the Republican Party and conservatives," Ruddy said in an interview. He and others on the right say it's unwise to let a single TV company grow to the size Sinclair proposes: 233 stations in 108 markets.
Sinclair, which at the beginning of the year estimated it reached more than 38 percent of households, is banking on a regulatory quirk that allows only a part of some stations' audience to be counted to exceed the limit. It says it is also willing to sell some of the stations.
The opposition may also involve in competitive concerns.
Newsmax, TheBlaze and One America all have channels that compete with Sinclair for viewers. Their opposition echoes unease from the grand-daddy of conservative TV, 21st Century Fox Inc.'s Murdoch. Tribune owns 14 Fox affiliates — stations that carry local news and weather segments along with Fox shows — and Sinclair already has more than 50. Together they provide more leverage if Sinclair in negotiations tries to keep more of the lucrative fees paid by cable providers to carry TV signals.
The situation vexes Fox so much that it tried unsuccessfully to outbid Sinclair for Tribune. That failed, and Fox has mulled yanking its affiliation from Sinclair altogether and switching to independent broadcaster Ion Media Networks Inc. Any switch is unlikely to happen before the end of this year, when some of contracts between Sinclair and Fox expire, said a person familiar with the situation who asked not to be identified because details are confidential.
There's also the possibility that Sinclair expands upon Tribune's WGN American cable network, which already reaches 80 million homes, to form a rival to Fox News.
"I have no doubt that this had been a long held goal of Sinclair — to create a competitor to Fox News — I welcome it," Ruddy said.
But, he added, if Sinclair can reach 70 percent of U.S. homes, then eventually so will CBS Corp., Walt Disney Co.'s ABC, and Comcast Corp.'s NBC and "they are liberal."
Charles Herring, president of One America Network parent Herring Networks Inc., said Sinclair will have leverage to force cable providers that most viewers rely upon to pay high fees for its TV stations' signals, draining the pool of money available for independent programmers such as his news channel.
"Small, large, left, right — everybody has spoken out against this merger," Herring said in an interview. "I'm unaware of anybody who isn't directly or very closely associated with Sinclair speaking out in favor of the merger," he added.
Like other broadcasters, Sinclair already has raised fees, to $1.75 per subscriber this year from $1.27 a year earlier, according to data compiled by Bloomberg.
Rebecca Hanson, Sinclair's senior vice president for policy, said the rates "are still well below the true value we deliver" and are negotiated in good faith, showing that "the market is working."
Newsmax needs to protect a TV channel seen in 35 million homes, and in a filing questioned the timing of the FCC's review, citing "a rush to approve" even as ownership rules that may limit the deal remain in flux.
On Wednesday, the FCC said it was pausing its review to allow more time for comments, which are due Nov. 2. The pause weakens potential claims the FCC's process is unfair and isn't a sign of trouble for the deal, Bloomberg Intelligence analyst Matthew Schettenhelm said in a note Thursday.
Also Thursday the Coalition to Save Local Media — an alliance that includes One America, TheBlaze, the Common Cause policy group and Dish Network Corp., which worries about Sinclair demanding higher fee — said it was commencing an advertising campaign against the deal.
Sinclair proposed the merger less than three weeks after the FCC under Chairman Ajit Pai, a Republican appointed by Trump, eased limits. Pai reinstated an obsolete rule that counts just half of some stations' audience when judging holdings against the 39 percent national cap.
Sinclair told investors the purchase of 42 stations would leave its signals covering 72 percent of U.S. households. It told the FCC that even when partially counting some station audiences, it still would exceed the national cap as well as violate rules against multiple local stations.
Sinclair has said it may sell stations to comply with limits. According to Ruddy, Pai in a conversation said he may commence a months-long review of ownership rules before concluding the FCC's review of the merger. An FCC spokeswoman said the chairman hadn't decided the timing of the issues. Before Sinclair announced its deal Pai said the FCC would begin reviewing the national cap "later this year."
The deal is the latest in a string of acquisitions that already totaled more than more than 100 stations over the past decade for the Hunt Valley, Maryland-based broadcaster that started in 1971 with a single TV station.
In broadcast examples posted on his Facebook page, Epshteyn routinely echoes President Trump: the estate tax needs to go; tougher action is needed against Iran; there is "real substance" to Trump's America First foreign policy.
© Copyright 2021 Bloomberg News. All rights reserved.