The Federal Communications Commission has levied a record-breaking fine against Sinclair Broadcast Group (NASDAQ: SBGI) as the result of an agreement between the broadcaster and regulators. An investigation by the FCC revealed several regulatory breaches by the company.
The resolution agreed to by Sinclair, includes the $48 million fine, the largest such fine levied against a broadcaster, and a "strict compliance plan" to prevent future breaches of industry regulation. FCC chairman Ajit Pai has opted to allow Sinclair to keep its broadcast licenses, despite calls by rivals to rescind the company's licensing.
"Today's penalty, along with the failure of the Sinclair/Tribune transaction, should serve as a cautionary tale to other licensees seeking Commission approval of a transaction in the future," Pai said, addressing the agreement. "On the other hand, I disagree with those who, for transparently political reasons, demand that we revoke Sinclair's licenses. While they don't like what they perceive to be the broadcaster's viewpoints, the First Amendment still applies around here."
According to FCC investigation, Sinclair is responsible for several deceptive and illegal practices. In 2018, the FCC blocked an attempt by Sinclair to purchase Tribune Media, which later resulted in a lawsuit by Tribune alleging breach of contract by Sinclair. Sinclair then attempted to deceive the FCC, which required divesting certain properties as part of its approval conditions, by selling off those properties to companies with ties to the Sinclair family.
The company had also engaged in deceptive advertising practices, according to the investigation by the FCC. Sinclair owned stations broadcasted paid segments by the Huntsman Cancer Institute as if they were news reports, rather than sponsored content, a violation of FCC regulation. The company also shared the segments with outside broadcasters without divulging that they were sponsored content, another breach of regulation.
The decision to fine Sinclair but not suspend its licensing has drawn criticism from the company's contemporaries; commentary surrounding the decision has been at least somewhat politically charged. Sinclair is notoriously right-leaning, with the company even requiring stations to air pro-trump commentary. Some of those criticizing Pai's decision are left-leaning rivals of Sinclair.