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WASHINGTON, DC 20510

November 15, 2017

The Honorable David L. Hunt

Inspector General

Federal Communications Commission
445 12th Street, sw

Washington, DC. 20554

Dear Inspector General Hunt:

We write to request that you commence an investigation into whether the chairman of the
Federal Communications Commission (FCC), Ajit Pai, is executing his leadership of the FCC
free from influences that compromise his objectivity and impartiality.

In particular, we have strong concerns that the FCC’s ongoing review of the proposed merger of
Sinclair Broadcasting (Sinclair) and Tribune Media (Tribune) may be tainted by a series of
actions and events that raise questions about the independence and impartiality of the FCC.

As you may be aware, the FCC is currently reviewing the proposed acquisition of Tribune by
Sinclair. A Sinclair-Tribune merger, if approved, would create a broadcasting giant with 223 TV
stations serving 108 markets (including 39 of the top 50), covering 72% of US. households.

This merger would never have been possible without a series of actions (detailed below) to
overturn decades-long, settled legal precedent undertaken by Chairman Pai since he assumed the
helm of the FCC in J anuary.

Through these actions, Chairman Pai has signaled his clear receptiveness to approving the
Sinclair-Tribune transaction and in fact paved the way for its consummation.

Given the seriousness of our concerns, as part of this investigation, we ask that you direct the
Chairman to immediately recuse himself from all actions related to the merger on an interim
basis until your investigation determines whether a permanent recusal is warranted.

We further ask that you direct the FCC’s staff to immediately cease all actions related to the
agency’s consideration of the merger until your investigation is concluded. [Under separate
cover, we are requesting the same from Chairman Pai; we are asking him to recuse himself on a
temporary basis from further actions related to the merger until your investigation concludes
whether he should be permanently disqualified from the matter because of an incurable conflict
of interest]

The timeline below informs our sense of alarm that the F CC has failed to act independently and
impartially in this matter:

0 After the November 2016 presidential election, President-Elect Trump met individually with
David Smith, the executive chairman and former CEO of Sinclair, and discussed changing

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FCC rules to benefit Sinclair. According to reports, "potential FCC rule changes were
discussed" after President-Elect Trump asked Mr. Smith, "What do you need to happen in
your business?”1

0 On November 16, 2016, then-Commissioner Pai traveled to Baltimore, Maryland to have an
off-the-record meeting with Sinclair employees and lunch with key company executives.2
This meeting was not disclosed publicly at the time.

o In December 2016, J ared Kushner, President Trump’s son-in law and current Senior White
House Advisor, reported that the President’s campaign had “struck a deal” with Sinclair for
better media coverage during the election 3

o On J anuary 6, 2017, Commissioner Pai met privately with Sinclair representatives at the
Consumer Electronics Show 1n Las Vegas.4 This meeting was also not initially publically
disclosed.

a On J anuary 16, 2017, Commissioner Pai traveled to New York City to meet privately with
President-Elect Trump.5

0 On J anuary 19, 2017, Commissioner Pai traveled to Arlington, Virginia, to meet again with
executives from Sinclair.6 A summary of the meeting, filed in the FCC’s public docket,
shows that the agency’s restrictions on joint or shared-service agreements were discussed in

detail.7

0 On J anuary 22, 2017, President Trump elevated Commissioner Pai to be permanent
Chairman of the FCC.

o On February 3, 2017, pursuant to unilateral direction from the now Chairman Pai, the FCC’s
Media Bureau announced that it would no longer review joint sales agreements and shared-
services agreements in broadcast mergers.8

o On February 23, 2017, the FCC started a proceeding to allow TV broadcasters to begin using
Next Gen TV (also known as ATSC 3.0)—a technology for which Sinclair holds the key

patents.9

' Claire Atkinson and Josh Kosman, Sinclair is close to buying all of Tribune’s TV
stations, New York Post (Mar. 14, 2017)
2 https://apps.fcc.gov/edocs_public/attachmatch/DOC-346883A1.pdf
3 https://www.politico.com/story/2016/12/trump-campaign-sinclair-broadcasting-jared-kushner-232764
4 https://apps.fcc.gov/edocs_public/attachmatch/DOC-346883A1.pdf
5 http://www.broadcastingcable.com/news/washington/trump-meets-fccs-p‘ai/ 162522
6 https://apps.fcc.gov/edocs_public/attachmatch/DOC-346883A1.pdf

: www.tvnewscheck.com article 101272 fcc—revokes-‘as-midni ht-re ulation. Sinclair attendees, based on
press reports, would have known that Commissioner Pai had just met with the President-Elect.
3 Id.
9 Federal Communications Commission, Notice of Proposed Rulemaking, In the
Matter of Authorizing Permissive Use of the "Next Generation" Broadcast Television
Standard (GN Docket No. 16-142) at" 2 (Feb. 23, 2017). Although the proposal for Next Gen TV came from various
broadcast groups, Sinclair is the lead proponent of the technology. Mike Dano, With ATSC 3. 0, TVBroadcasters
Might Try to Steal Some Wireless Business After FCC’s Incentive Auction, Fierce Wireless (Nov. 9, 2015)
(fiercewireless.com/wireless/atsc-S-O-tv-broadcasters—might-try-to-steal-some-wirelessbusiness-
after-fcc-s-incentive ); John Eggerton, ONE Media Strikes Deal to Advance ATSC 3.0
Chipsets, Broadcasting and Cable (Mar. 28, 2017)
(broadcastingcable.com/news/washington/one-media-strikes-deal-advance-atsc-BO-
chipsets/164463). http://www.fiercecable.com/broadcasting/nexstar—sinclair-atsc—3-0-spectrum-consortium-
searching-for-ceo

 

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o On March 6, 2017, Chairman Pai again met with President Trump. Chairman Pai, stated that
he and the President did not discuss “any pending proceedings” at the F CC.'0

0 On April 12, 2017, Chairman Pai led the F CC in a party line vote to ease ownership caps by
reinstating the technologically-outdated UHF discount.ll Without this reversal, Sinclair
would have been legally barred from merging with Tribune.

0 On April 21, 2017, Sinclair announced its intention to purchase Bonten Media Group
(Bonten), owner of 14 television stations in eight markets.12 Bonten also provided services to
four other stations through joint sales agreements.

o On May 8, 2017 Sinclair announced its intention to acquire Tribune for $3.9 billion.[3

0 On June 30, 2017, the FCC approved the purchase of seven Bonten stations by Sinclair
(Sinclair divested the other seven stations). The transaction was later consummated by the
parties on September 5, 2017, at which time Sinclair assumed the joint sales agreements held
by Bonten.l4 If the FCC had not relaxed its review of joint sales agreements consistent with
Sinclair’s request, it is unlikely this transaction would have been approved expeditiously
without the termination of at least some of the joint sales agreements.

o On October 24, 2017, Chairman Pai led the FCC (on a party-line vote) in eliminating the
broadcast main studio rule. Doing away with the rule, which was established in 1940,
benefits the largest broadcasters, especially Sinclair who has made a pattern of reducing local
investments in station studios and consolidating studio and newsgathering operations at its
headquarters in Maryland.”

0 At the upcoming November 16, 2017 FCC Open Meeting, Chairman Pai is expected to lead
FCC (on a partisan basis) to take two actions that will directly benefit Sinclair.

0 Chairman Pai is expected to lead the FCC’s party-line vote to eliminate decades-long
rules that prevent TV stations in the same market from merging if the outcome leads
to fewer than eight independent stations operating in that market, or if the merger is
between two of the top four stations in a market.[6 This rule change directly benefits
the monopoly aspirations of Sinclair by eliminating the need for it to divest any of the
stations it is purchasing from Tribune.'7

0 At the same meeting, Chairman Pai also is expected to lead the FCC (on a party-line
vote) to approve broadcaster’s use of Next Gen TV. The item that Chairman Pai has
put forth for vote would directly benefit Sinclair. First, the draft order would establish
a licensing framework for broadcasters that would allow Sinclair to establish and

1° https://apps.fcc.gov/edocs_public/attachmatch/DOC-346883A1.pdf
‘1 https://www.fcc.gov/document/reinstatement-uhf-discount. Without this reversal, Sinclair would have been

legally barred from merging with Tribune.

1’ https://www.prnewswire.com/news-releases/sinclair-broadcast-group-announces-agreement-to-purchase-
bonten-media-group-tv—stations-300443390.html

13 http://www.tribunemedia.com/sinclair-broadcast-group-to-acquire-tribune-media-company-for-approximately-
3-9-billion/

1‘ http://www.baItimoresun.com/business/bs-bz-sinclair-finalizes-bonten-deal-20170905-story.html

15 http://deaclline.com/2017/10/fcc-set-to-vote-on-ending-main-studio-rule-in-boost-to-sinclair-1202193716/
’5 https://www.washingtonpost.com/ news/the—switch/wp/2017/ 10/ 25/the-fcc-plans-to-roll-back-some-of-its-
biggest-rules-against-media-consolidation/?utm_term=.a1454bda1897

1’ This action is being taken upon a Motion for Reconsideration and without the normal notice and comment
process traditionally used in media ownership rulemakings.

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maintain a monopoly over its patentedtechnology.18 Secondly, the proposed licensing
scheme will facilitate Sinclair’s ability to extract licensing fees to transmit and
receive Next Gen TV signals.

Put simply, this timeline suggests a disturbing pattern of a three way quid-pro-quo involving
Sinclair, the Trump Administration, and Ajit Pai. Because of these facts, we are gravely
concerned that Chairman Pai may have engaged in a pattern and practice of activity related to the

Sinclair—Tribune transaction in a way that imperils the independence and public interest mission
of the FCC.

In order to address these concerns, we request that you investigate the matter. This investigation
should be conducted in a thorough and impartial manner, consistent with other investigations
undertaken by your office. We expect your office to determine whether improper actions have
taken place that call into question the independence of the agency, and request that you provide
regular updates to our offices on the course of your investigation.

Your investigation should, at a minimum, examine the following questions:

1. Whether the totality of the Chairman’s actions with regard to media ownership policies,
media concentration policies, or the Sinclair- Tribune transaction, demonstrate actual
impropriety, unscrupulous behavior, favoritism towards Sinclair, or a lack of
impartiality?

2. Whether the totality of the Chairman’ actions with regard to media ownership policies,
media concentration policies, or the Sinclair-Tribune transaction demonstrate the
appearance of impropriety, unscrupulous behavior, favoritism towards Sinclair, or a lack
of impartiality?

3. Whether the Chairman’s actions create the appearance or demonstrate the actual lack of
independence of the FCC?

4. Whether Chairman Pai’s actual impropriety, unscrupulous behavior, favoritism towards
Sinclair, or a lack of impartiality requires that he recuse himself from all matters that
would materially impact Sinclair or media ownership and media concentration matters?

5. Whether the appearance of Chairman Pai’s impropriety, unscrupulous behavior,

favoritism towards Sinclair, or a lack of impartiality requires that he recuse himself from
all matters that would materially impact Sinclair or any media ownership and media
concentration matters?

6. Whether the FCC’s consideration of the Next Generation TV matters has been unduly
influenced by the Chairman’s desire to boost the business interests of Sinclair? Please
include in your answer whether the FCC’s examination of this matter has appropriately
taken into account the competition and anti-trust issues raised by Sinclair’s role as the

sole patent holder of key components of the Advanced Television Systems Committee
3.0 (ATSC 3.0) technology.

‘3 The draft order under consideration will not require Sinclair to offer, to other broadcasters, access to its
patented ATSC 3.0 technology on a reasonable and nondiscriminatory basis. https://www.fcc.gov/document/next-
generation-broadcast-television-standard.

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