Editor's Note: This column was updated from an earlier version that incorrectly attributed a Sinclair-Tribune ad sales "jumpstart" to the U.S. Department of Justice, when it should have been attributed to the point-of-view of the column's author Wayne Friedman. A correction has also been published.
Sinclair/Tribune now has advertising anti-trust issues, according to reports. Does this stem from TV stations' efforts to get bigger and offer a new source of national TV advertising dollars?
According to The Wall Street Journal, a Department of Justice investigation is looking into whether federal antitrust laws were violated by having Sinclair and Tribune ad teams “communicate” with each other, possibly leading to raised television advertising rates.
According to the DOJ, it appears that Sinclair-Tribune was trying to jumpstart their soon-to-be-bigger company -- making combined advertising deals for all its TV stations -- before getting approval from the FCC.
The backdrop looks familiar: the need for scale and larger ad revenues. A Sinclair-Tribune combination would initially give the proposed big TV station group massive scale of over 70% of U.S. TV homes.
Obvious to everyone, this percentage far exceeds the 39% FCC limit. Sinclair would need to sell off some stations. At the same time, Sinclair hoped the new Trump Administration would make good to be more favorable toward business with fewer regulations.
Could that possibly mean raising the TV station limit level to 50% or 60%?
Maybe Sinclair could keep some stations under a different sort of sales arrangement. Now, after Sinclair's proposed deals to sell stations, the FCC has “serious concerns” about Sinclair's overall merger plans.
In a perfect world, national TV media agency executives would say it's always great to have national TV alternatives to high-priced broadcast networks.
Many believe the growing Sinclair Broadcast Group wants to become a TV network. Exactly what kind -- broadcast or cable -- has not been confirmed.
Speculation has been rampant for some time that Sinclair wants to take a run at the Fox News Channel, to compete in the conservative TV news channel space. Still, Chris Ripley, president/CEO, Sinclair, has downplayed such talk, publicly saying Sinclair wasn't interested in starting a network.
So back to the possible local TV advertising collusion. Why would Sinclair-Tribune ad execs appear be in such a rush -- if reports are true -- to work together before the deal closed, especially when initial approval seemed likely?
Executives at a major media agency initially contacted by TV Watch were surprised about the news, having no knowledge of such allegations. While we don't know exactly what went on, here is something to consider:
Over a year and a half ago, around January 2017, Sinclair was shopping -- somewhat quietly -- in an effort build an industry-wide, co-op programmatic TV operation, OxMyx. Many TV station groups would benefit from the advertising spoils.
To avoid any anti-trust issues the venture was akin to NCC Media, the local cable TV advertising co-op, in which three big cable TV operators -- Comcast, Charter and Cox -- are equity partners, but have no operating control.
A similar TV station consortium advertising group -- pooling together TV homes in a programmatic buying unit -- would reach at least 70% of U.S. TV homes. And that for the first time, would give TV station groups access to network-like national TV media dollars, getting approval from national media agency TV buyers.
But all this was shelved in May 2017. Sinclair had something bigger in mind -- a much more lucrative $3.9 billion deal with Tribune Media, which instantly gave Sinclair that magical -- if theoretical -- 70% U.S. household number it had always dreamed about.
And unlike a TV ad consortium, it would control it all.
Now they only seem to be in control of more dreaming.
Wayne, whether they were planning some sort of syndicated "network" or not is one thing but to think that they pre-sold spot time across a host of stations that either party owned at higher than normal CPMs is science fiction-like thinking. Why would any agency pay higher CPMs for such an offer. You buy spot TV selectively---market by market--with varying GRP weithts in most markets---or groupings of markets. Unless Sinclair had some form of national programming on all of the stations for sale---network-style---they would not all be considered as a single buy no matter what the coverage was. No wonder the agency never heard of such an offer. It most likely never happened.
How Putninsque of state TV.
how can they price-fix when there markets don't match
Ed, Sinclair has been selling a semi national footprint foe over 3 years now. Jon Spaet, formerly head of CNBC ad sales, is heading it up. Their goal was to create a true national footprint with the Tribune deal. Fyi...