FCC Fines Sinclair Over $13 Million But Commissioners’ Comments Are What’s Interesting
by Jerry Glover
December 22, 2017
The FCC has recommended a fine of over $13 million against Sinclair Broadcasting. Why? The Federal Communications Act, 47 U.S.C. Sec. 317(a)(1), requires broadcasters to let their viewers know if programming, program segments or news segments broadcast on their air have been paid for, directly or indirectly, by a third party and to identify that third party. FCC regulations also require this disclosure. See FCC Rules Sec. 73.1212(a). This is especially important in the news area since a viewer has a right to know if seemingly objective news reporting is actually subtle hype produced by a person or entity who paid for it. To some extent, these paid-for segments are advertisements in disguise.
The Commission found that Sinclair had broadcast this type of paid-programming over all 64 of its stations (collectively, the programming was aired more than 1,400 times) and to 13 non-Sinclair stations (airing more than 280 times) without informing its audience that it was sponsored and who sponsored it. Two of the stations were in Illinois: Springfield and Champaign.
The sponsoring programs were “news stories” about Huntsman Cancer Institute (HCI) who had paid for these stories. They included 60-90 second stories made to look like independently generated news stories and 30-minute programs about HCI. Huntsman had paid for all of them. Some broadcasts of some of the programs noted they were sponsored but the sponsor was not revealed. Huntsman and Sinclair had entered into a contract which required Sinclair to produce and distribute this programming for a fee paid by Huntsman.
Sinclair argued it was not legally required to make disclosures about sponsorship to its viewers. The FCC scoffed at this notion and also noted that the contract with Huntsman required Sinclair to provide appropriate sponsorship identification on the sponsored programming. It added that Sinclair management had informed its stations to give proper on-air sponsorship identification.
The amount of the fine against Sinclair was determined as follows: The FCC started with the base forfeiture amount, $4,000, required by FCC rules (Section 1.80(b)) for each violation. Multiply $4,000 by the number of instances stations broadcast the programming without proper sponsorship identification (1,437 instances without the disclosure plus 286 times for failing to provide to stations correct sponsorship information for a total of 1,723 instances). Total fine: $6,892,000. It should be noted that the Federal Communications Act and FCC rules authorizes the Commission to assess a forfeiture of up to $48,114 per violation up to a statutory maximum of $481,147 for a single act or failure to act. Using those figures the total fine could have been as much as $82 million.
The FCC also determined that an “upward adjustment” was also warranted to serve as a warning to other broadcasters. The Commission proposed a total forfeitur4e of $13,376.200.
But then several FCC Commissioners wrote their own comments to the proposed forfeiture decision. Can you spell “catty”? The FCC Chairman, Ajit Pai (a former lawyer for Verizon), noted that the forfeiture proposed was the “largest forfeiture in the history of the agency for a [violation of the sponsorship rules].” Mr. Pai disagreed with his fellow Commission members that the forfeiture against Sinclair should have totaled $82 million figure noting that two recent Commission decisions concerning the sponsorship rules, “both taken under the prior Administration,” [Meow!!] had totaled only $3,000 per violation and only $4,250 per violation. The Chairman was willing to “leave it to others to speculate as to why [other Commissioners—Democrats you know] wish to punish this particular company in this particular way.” [Double Meow!!]. As you may remember, the FCC is reviewing a proposal by Sinclair to purchase Tribune Broadcasting. Sinclair is also considered a right-wing broadcaster similar to Fox News.
Commissioner Mignon Clyburn argued that “the punishment does not fit the crime against a company that grossed more than $2.7 billion in revenue last year.” She noted that the $13 million proposed forfeiture amounted to 1/6 of the statutory maximum and represents 0.5% of the company’s 2016 revenues.
Commissioner Michael O’Reilly called the proposed forfeiture a “stern but fitting action.”
Commissioner Jessica Rosenworcel argued that the “unprecedented volume of these violations deserves an unprecedented response.” She argued the proposed forfeiture gave Sinclair a break. She noted the forfeiture amounted to only 0.3 percent of the value of “the merger it currently has pending before this agency.”
It’s nice to see that the FCC is just as politically partisan as the rest of Washington.