Monty Tayloe

Tribune’s $1 billion breach of contract lawsuit against Sinclair (see 1808090042) is expected to end with a settlement, and Sinclair would seek to conclude it relatively quickly, said analysts, attorneys and academics in interviews. Since Sinclair/Tribune deal was valued at $3.9 billion, Tribune’s seeking more than a quarter of the value as damages is likely “posturing,” leading to a much smaller payout, said George Mason University School of Business assistant finance professor Derek Horstmeyer.

Tribune filed a $1 billion breach of contract complaint against Sinclair Broadcast in the wee hours of Thursday morning, and the collapse of their deal could mean the end of the FCC’s administrative law judge proceeding against Sinclair but likely won’t put to rest all the consequences of the agency’s hearing designation order, attorneys and broadcasters said in Thursday interviews.

The likely unwinding of Sinclair’s buy of Tribune and the related FCC hearing designation order are unlikely to derail rollout of ATSC 3.0 but might cause it to take longer, said supporters and critics of the new broadcast standard (see 1807270002). Sinclair/Tribune would have given the standard backing of a broadcaster reaching 60 percent of the U.S., but the entire industry is now heavily invested in ATSC 3.0, said broadcasters, industry officials and lawyers. Sinclair’s plans for the new standard predate its plan to buy Tribune, said Mark Aitken, Sinclair vice president-advanced technology. “NextGen TV will move forward regardless,” said New America Wireless Future Program Director Michael Calabrese, a frequent opponent of 3.0.

The FCC’s likely sinking of Sinclair buying Tribune is “disgraceful” and “so sad and unfair,” said President Donald Trump Tuesday evening in a tweet that angered Democratic lawmakers, but is considered unlikely to influence FCC policy, said boosters and critics of FCC Chairman Ajit Pai. “I don’t think the chairman would kowtow” to Trump, said Benton Foundation and Georgetown Law Institute for Technology Law and Policy fellow Gigi Sohn, an aide to previous FCC Chairman Tom Wheeler. “I’m sure he knows the FCC is an independent agency,” said Newsmax CEO Chris Ruddy, a friend of Trump’s and opponent of Sinclair/Tribune. “I would be very surprised if he ever tried to meddle with FCC policy.”

Sinclair told FCC Chairman Ajit Pai it didn’t have the time or authority to withdraw the deal to buy Tribune after a hearing designation order (HDO) circulated, said an email from General Counsel Barry Faber to Pai Wednesday. It was filed the next day and posted Friday in docket 17-179 as an ex parte by Commissioner Jessica Rosenworcel’s office. The email mentions a Tuesday call between Faber and Pai. The draft HDO was announced July 16 (see 1807190060) and released Thursday.

FCC designation for hearing of Sinclair’s proposed buy of Tribune will almost certainly kill that deal by early August and could threaten other Sinclair licenses even if the deal goes away, said industry officials in interviews. Though Sinclair withdrew the divestitures in Dallas, Houston and Chicago (see 1807180060) targeted by the hearing designation order, "material questions remain,” said the HDO, released Thursday as expected (see 1807180066). The case “includes a potential element of misrepresentation or lack of candor that may suggest granting other, related applications by the same party would not be in the public interest,” it said.

Sinclair could restructure its Tribune buy to fit under the 50 percent national ownership cap being pushed by several TV station owners (see 1806050040) if that's what the FCC decides on, Sinclair CEO Chris Ripley responded to us at a panel during an S&P investor conference Thursday in New York. Ripley declined to speculate what the agency would do.

The FCC Technology Advisory Council Antenna Technology working group tentatively concluded that advances in antenna technology will require rule changes, said American Radio Relay League consultant and working group head Greg Lapin at the TAC’s meeting Tuesday. Smart antennas and those constructed of metamaterials are “showing promise” at increasing efficiency and avoiding interference, Lapin said. The TAC also discussed antenna aesthetics, drones, phone theft and the progress of 5G. New agency rules for antennas will need to be “flexible enough” to allow the new ones to make “creative use of the spectrum,” Lapin said.

Broadcasters need to move as quickly as possible to transition to ATSC 3.0 or they're in danger of losing their spectrum and market share to other industries, said FCC Commissioner Mike O'Rielly and Spectrum Consortium President John Hane in separate speeches Thursday to the ATSC Next Gen TV Conference. Through 3.0, broadcasters need to maximize the use of their existing spectrum, or it will be given to another industry, Hane said. Under the current technology, broadcasters provide a valuable service but take up too much spectrum to provide it, leading regulators to periodically pursue “progressive reclamation” of it as with the incentive auction, Hane said.

The FCC put Sinclair’s amendments to its proposed buy of Tribune out for public comment, said a public notice Monday. With the final deadline July 12, the transaction likely wouldn’t be voted on before August or September, communications attorneys told us. A U.S. Court of Appeals for the D.C. Circuit decision that could knock down the UHF discount is expected around then.