October 13, 2018

Sinclair and Tribune

Ain't Gonna Happen

On September 23, 2018, I gave a presentation about Sinclair Media Group and Chicago's Tribune Media at the Third Unitarian Church, Chicago. The following is a transcript of the presentation. You can also find the audio online here in MP3 or here in M4A.

This presentation will focus on two companies: Tribune Media along with its ancestors and descendants, and Sinclair Broadcast Group. The two companies were slated to merge, but because of developments that I'll explain in this presentation, they now will not.

I'll provide a capsule history of the Tribune (focusing in particular on the past two decades), then a capsule history of Sinclair, then a capsule history of their failed attempt to merge, and some closing remarks. One point to keep in mind: histories about the politics of media and of media companies like those I'll discuss today are couched as a game of thrones -- in the context of shareholders, lawyers, courts, corporations, markets, capitalism, and certainly not anti-trade riffraff like me. History often downplays or flat-out ignores the role of political activists to affect these companies, but it bears noting that political activism has played a considerable role in the narrative of these two companies at key points. I will, unlike conventional histories, highlight that activism in the story of these two companies.

The Tribune begins of course with the Chicago Tribune newspaper, founded in 1847, and in its early history supported of anti-slavery efforts, as well as running xenophobic op-eds. In the late 1850s, the Tribune absorbed three other Chicago newspapers: the Free West, the Democratic Press, and the Chicago Democrat. (Media concentration is not a new thing.) Also in the 1850s, the co-founder of the Cleveland Leader newspaper, Joseph Medill, became editor of the Tribune and effectively ran the paper on and off for the next 40 years. Medill was elected Mayor of Chicago in 1871. (The revolving door between media and politics is not a new thing.) In 1911, one of Medill's grandsons Robert Rutherford McCormick became owner of the Tribune. (Nepotism is not a new thing.)

McCormick, during the next four decades as owner, grew the newspaper via publicity campaigns like lotteries, comic strips (Little Orphan Annie began in the Tribune), the advent of Major League Baseball's all-star game, and a design competition for Tribune Tower, all the while aligning with the Old Right conservative political perspective and editorial stance. The Tribune also entered the fray regarding a new medium, leasing out radio station WDAP and taking the Tribune's motto as self-proclaimed World's Greatest Newspaper, taking the initials as a new set of call letters, WGN. Tribune entered a political fight to commercialize what had been a widespread and nonprofit medium. The Tribune's attorney, Louis Caldwell, became the first general council of the Federal Radio Commission (the predecessor to the Federal Communication Commission) and led an effort to reallocate radio station time in favor of commercial stations like WGN. That allocation, killed off a great many student, community, and non-profit stations, and gave WGN the maximum broadcast strength allowed (50,000 watts). A battle for control of American broadcasting ensued over the late 1920s and 1930s, but the commercial opposition, with its greater resources and insider political connections defeated the efforts to make a significant nonprofit presence on radio.

Another four decades after that, with political ferment occurring in the 1960s and 1970s, policies to limit the concentration of media were passed in the United States. Tribune was able to avoid some of these media ownership limits as a result of various "grandfathering" clauses in those laws. These clauses allowed those small number of companies that already held ownership of multiple media outlets in the same vicinity to keep their ownership. As part of the trend of media consolidation that ensued in the 1980s and 1990s, Tribune was able to extend its own reach to the extent that Tribune, in its own business memoranda, could claim that it can reach 90% of all Chicagoans. As documented by Erik Klinenberg in his book "Fighting for Air", Tribune at its peak could claim a media presence in newspapers with the Chicago Tribune, magazines with Chicago magazine, television with WGN TV, radio with WGN AM, Spanish language media with its ownership in Hoy, and even ownership of the Chicago Cubs baseball team.

Tribune had grander ambitions still: it sought to become a top-ten media company by building out TV-newspaper duopolies across America. It achieved a significant step in that direction when in the early 2000s Tribune bought the Times-Mirror newspaper chain, thus gaining a TV-duopoly foothold in New York, Los Angeles, Baltimore, and Hartford, Connecticut. Tribune got another waiver from the FCC to keep the duopolies in these cities in contravention of those media ownership rules. But extending its growth required changing or abolishing these ownership limits, "deregulating" in the neoliberal parlance of the time. In early 2002 and 2003, with a Republican FCC in the majority, a Republican in the White House, Republicans in command of both houses of Congress, and Republicans in key roles in the judiciary, Tribune's dream -- and America's collective nightmare -- was about to come true.

Except that it didn't. During that year, a grassroots political effort (including efforts in Chicago with my group Chicago Media Action) sought to raise attention of the evisceration of the remaining media ownership limits. Those efforts, galvanized by the internet, and catching a number of lucky breaks (including coverage from Republicans, like William Safire in the New York Times), protests in a number of cities including Chicago (probably a historic first) and gaining media coverage of media policy. The numbers broke all records of FCC feedback in the agency's history, gaining the attention of Congress. The FCC nevertheless voted along party lines to eviscerate the rules, but the protests and swelling awareness fueled lawsuits that blocked the rule changes, and blocked billions of dollars of pending media transactions.

The Tribune and its lobbying efforts then fell flat-footed, as it now swam uphill in trying to reverse the court rulings and the beating in the court of public opinion. Rather than securing duopolies to escalate growth nationwide, it now faced a parade of judicial defeats. The deflated promises and missed expectations spurred a shareholder revolt who demanded a change of ownership. The result: Chicago-area real-estate tycoon Sam Zell became owner. Shortly thereafter, Tribune filed for bankruptcy -- the largest media bankruptcy in American history. Tribune remained mired in bankruptcy for four years, after which Tribune got balkanized into two companies: Tribune Publishing, focusing on print publishing and renamed TRONC, and Tribune Media, focusing on radio and television broadcast.

Reflect for a moment on how the mighty Tribune Corporation fell: Activists entered the fray at the right time, and caused a block of key plans leading to cascade of effects over the subsequent fifteen years. You are more powerful than you know.

Both arms of the former Tribune had sought buyers. Tribune Publishing had sought a buyer in Gannett, before Gannett pulled out of talks twice. And Tribune Media in early 2017 had courted the largest TV station owner in the United States: A conglomerate based in suburban Baltimore, abbreviated SBG: Sinclair Broadcast Group.

Julian Sinclair Smith was an engineer who owned a radio station in Baltimore. With the expansion of the UHF television band, Julian Sinclair Smith applied for and received a UHF television license and founded a company in 1971, Chesapeake Television Corporation. By 1986, Julian Smith's company grew to a network of three stations, WBFF in Baltimore, and stations in Pittsburgh and in Columbus, Ohio. In 1993, Julian Smith passed away. Control of the family business fell to Julian's four sons -- David, J. Duncan, Robert, and Frederick -- who changed the company's name in memory of their father, and Sinclair Broadcast Group was founded.

All four Smith brothers sit on the executive board of Sinclair, but David Smith serves as executive chairman and is the driving force of Sinclair. And you can't understand Sinclair's history without understanding something about David Smith.

David Smith was the only son of Julian Sinclair Smith who had any media experience: David helped establish a television transmitter company, and David also worked as a partner for a company called Ciné Processors that distributed bootleg videotaped copies of pornographic films. Ciné Processors operated from the basement of one the buildings owned by Julian Sinclair Smith. Ciné Processors was found to have connection with mob politics and untimely was raided by the police.

David Smith's partner at Ciné Processors said: "How David got control of the family company after that, I don't know."

In 1996, David Smith was arrested on suspicion of soliciting a prostitute; the solicitation took place in a Mercedes automobile owned by Sinclair. David Smith faced a misdemeanor sex offense, and avoided community service work by having Sinclair broadcast announcements of drug-counseling programs. Needless to say, the judge in the case was incensed: "How can employees do community service for their boss?" said the judge.

David Smith's politics stand to the right of Atilla the Hun. David Smith has been quoted as saying "The print media is so left wing as to be meaningless dribble which accounts for why the industry is and will fade away. Just no credibility." His rabid right-wing political views, since assuming control of Sinclair, has permeated Sinclair's actions, as illustrated by the following examples.

Example 1: Starting in 2001, Mark Hyman, a former Sinclair lobbyist, starting regularly producing one-minute-long conservative commentary pieces under a segment called "The Point", which ran for five years. Hyman during an interview on CNN compared Democrats to "holocaust deniers".

Example 2: Hyman was defending Sinclair's aggressive approach during the 2004 election to promote the presidency of George W. Bush and against Democratic nominee John Kerry. Sinclair refused to air an episode of the ABC news program "Nightline" that listed the names of American soldiers who died in the 2003 war and occupation of Iraq.

Example 3: In response, Sinclair ordered its stations to broadcast an anti-John-Kerry documentary called Stolen Honor. The documentary never aired as intended, because of a backlash from media activist groups which pressured Sinclair advertisers and causing a decline of Sinclair's stock value -- 17% and $105 million lost in a few days.

Example 4: An anonymous Sinclair ex-producer reported in Rolling Stone in 2005 that he was ordered to report no "...bad news out of Iraq -- no dead servicemen, no reports on how much we're spending, nothing. You weren't reporting news. You were reporting a political agenda that came down to you from the top of the food chain. Is any information that doesn't come directly from Sinclair or from the mouth of David Smith himself suspect? Perhaps that's the idea."

During the first decade of the 21st Century, Sinclair continued to grow in spite of media ownership limits. The approach was maddeningly simple: Sinclair employees or relatives of Sinclair employees would buy a TV station, particularly in a city where Sinclair already owned a TV station, and simply transfer the license to Sinclair after the purchase was complete. This approach even had a name: "sidecar agreements". Even when Sinclair gets caught, as it happened in 2001 when the FCC leveled a $40,000 fine, Sinclair got to keep the stations. Once it owns a station, Sinclair then cuts staff, sometimes by as much as 80%, and produces programs from a single centralized office in Maryland called News Central that's made to look like local TV outlets, but without disclosing the fact that it's not produced locally.

Sinclair took a serious financial hit in the Great Recession in the early years of the Obama administration, and even flirted with possible bankruptcy. Sinclair's financial prospects brightened after 2010 when the Supreme Court's ruled to upend campaign finance limitations in the ironically named Citizens' United ruling. It's important to note that upwards of 70% of the funds raised and spent in political campaigns in the United States are used for purchasing -- television advertisement time.

It was also during the Obama years that Sinclair faced a more stringent policy crackdown from the FCC. Then-FCC chair Tom Wheeler looked to change rules that Sinclair exploited: the rule that allowed UHF stations to divide their audience count by half, thus making it seem that their audiences were smaller than were actually the case, and the FCC's policy on allowing "sidecar agreements" where licenses could easily transferred from employees or relatives to large conglomerates.

But with the Trump administration and a Republican majority at the FCC, that crackdown became passe. Ajit Pai, within weeks of assuming the FCC chair, abolished the sidecar agreement rules; within months the FCC voted to restore the aforementioned FCC audience discount.

Also under Trump, Sinclair has doubled-down on its right-wing politics. Adding to Mark Hyman, Sinclair stations now include regular commentary from Boris Epshteyn, a former Trump administration assistant director of communications and now Sinclair's Chief Political Analyst. Boris Epshteyn was described by one commenter from the group Media Matters for America who watched nearly 300 "Bottom Line with Boris" clips and commented as follows: "[Boris] displays untold levels of ignorance and political obtuseness, along with a lack of charisma I cannot accurately convey with words." Epshteyn has defended Trump's "both-sides" line giving political cover to actual Nazis. Epshteyn has played down Trump's family separation policy, and attacked Maxine Waters and NFL players who protest during the National anthem. One columnist from the Baltimore Sun described the segments as "close to classic propaganda as anything I have seen in broadcast television in the last 30 years."

And there's yet still more: Sinclair now has a segment called the Terrorism Alert Desk, little more than inducing fear and panic among viewers and non-too-subtly equating the whole faith of Islam with terrorism. Sinclair also bought a national mobile news aggregation app called Circa, giving Sinclair a text-based news service which frequently trumpets Trump's agenda-of-the-day.

On top of all of this, employees at Sinclair have complained of dismal working conditions and contracts. A number of anonymous Sinclair employees wrote an op-ed for the website Vox, saying that employees have to put up with forced arbitration, a six-month non-compete clause, and if you're a Sinclair employee and you quit, you face financial penalties equal to 40% of your annual salary. Then there's the sexual harassment of Sinclair women employees. LuAnne Canipe, former Sinclair employee, said "Let's just say [there was] a sexual atmosphere that trickled down to different levels in the company. There was an improper work environment. I think that because of what [David Smith] did, there was a feeling that everything was fair game."

So, that's Sinclair in a nutshell: A massive conglomerate run by a right-wing crackpot and erstwhile pornography distributor, whose sexism runs rampant within the company and whose personal politics run rampant on America's television sets, assisted by a bonehead chief political analyst. Media critic Jay Rosen said Sinclair is "a new kind of media company -- a political empire with television stations".

How big is Sinclair? According to Sinclair's own business website (at sbgi.net), Sinclair owns 191 television stations, and broadcasts 601 television channels in 89 markets across America. Sinclair stations include affiliates with ABC, NBC, CBS, Fox, the CW, MyTV, and Univision. Sinclair's aggregate broadcast reach encompasses 40% of all American households (the current FCC limit is 39%). Sinclair reported revenue in the year 2017 came to $2.7 billion.

So bring Tribune Media into this morass. In February 2017, Sinclair announced it would purchase Tribune Media and its 42 additional television stations for $3.9 billion. The footprint of Sinclair would have escalated from 40% reach of all Americans to an estimated 72% reach of all Americans. Before the purchase, Sinclair had just one television station in America's top 10 most populous cities. After the purchase, Sinclair would have seven stations in America's 10 most populous cities.

But as I mentioned at the outset, the deal has been scuttled. So what happened? As with the media ownership uprising of 2003 that demolished Tribune's dreams to grow, people first in small groups then in larger formations began to organize and speak out. In the case of the uprising of 2003, that crystallization was largely new and largely unexpected (even among media activists), but it's now faster and easier to organize. Then, a number of lucky breaks helped the campaign.

For the Sinclair proposed merger of Tribune, that came in April 2018. Media producer Timothy Burke wrote an article for Deadspin headlined "How I made a dumb video making fun of Sinclair Broadcasting and somehow started a media war". The video shows a number of broadcasts from Sinclair-owned TV stations synced in parallel side-by-side on the screen reading the same script. The effect is eerie, the video went viral, and has been seen more than 200,000 times on YouTube, and garnered a host of follow-up coverage. It was even broadcast on Sinclair stations when a media watch group named Allied Progress paid for airtime on Sinclair stations to show an ad which excerpted the Deadspin video. The coverage also included an extended segment on the HBO television show Last Week Tonight with John Oliver, critiquing Sinclair and its history, garnering another multi-million-person audience.

In July 2018, the FCC announced that it would be referring the proposed Sinclair/Tribune merger to an administrative judge. In practical terms, this meant the FCC is killing the merger, citing in its decision Sinclair's shady sidecar agreements that Pai and the FCC were looking to approve. The same day Sinclair called off the merger, and Tribune then proceeded to file a $1 billion lawsuit against Sinclair citing a breach of contract.

The activist Kevin Danaher says that all political struggles boil down to just four words: "Unite Friends. Divide enemies." In this case, Tribune and Sinclair, which were nearly united are now very much divided, and will be fighting in court for a while. In the case of Tribune and Sinclair, popular forces successfully united friends and divided enemies.

So what does the future hold for Sinclair and for Tribune? Tribune Media is still looking for a buyer, and is continuing to fete and to vet potential suitors. Sinclair is reportedly trying to establish its own version of Fox News, a cable TV news network with blatant right-wing perspectives owned by Sinclair and a rival to Fox News. Sinclair announced in July that it was establishing its own streaming news app, called STIRR, which could serve as the launching pad for that rival to Fox News.

But one thing has changed, irreparably so, for Sinclair: People know about it, and I'm not talking about media activists like myself. Sinclair is now a household name with a degree of infamy, and that's something that Sinclair cannot take back. If history is any guide, that will matter going forward.

To get a glimpse of what the future may hold for Sinclair, it may be illustrative to look at the past for what happened to another right-wing media conglomerate. The former Clear Channel Communications. Clear Channel is parallel to Sinclair in many ways: Like Sinclair, Clear Channel was a mom-and-pop media operation -- run by the Mays family out of San Antonio, Texas. Like Sinclair, Clear Channel was the beneficiary of media ownership rule changes -- particularly at the federal level with the 1996 Telecommunications Act. Like Sinclair, Clear Channel took advantage of those changes and lax government enforcement and advances in technological changes in automation to grow rapidly into the largest radio station owner in American history -- Clear Channel, at its peak, owned about 1,200 radio stations.

Like Sinclair, Clear Channel was a favored home for right-wing media perspectives, being the largest broadcast distributor for Rush Limbaugh and serving as the spawning ground for another right-wing media darling who under Clear Channel's auspices organized pro-war rallies in the run-up to the 2003 War in Iraq, a DJ in Cincinnati by the name of Glenn Beck. Like Sinclair, Clear Channel sought to grow even bigger with further media rule changes. And like Sinclair, Clear Channel was blocked from its ambitions when the 2003 media ownership rule rewrite was halted by popular outcry and organizing.

But what happened to Clear Channel since all of that? A staggered collapse. First, Clear Channel -- having become the poster child of media consolidation gone amok -- hemorrhaged listeners who began to turn away. Clear Channel proceeded to sell off nearly a third of its radio stations, and also sought to rehabilitate its brand, given the infamy associated with the name, so it changed its name to iHeartRadio, and its larger complex of media properties became iHeartMedia. But the former Clear Channel continued to lose prominence and audience, against internet streaming options, an increase in low-power FM community radio broadcasters, and a renaissance of podcasting.

The former Clear Channel raised the money to buy its radio stations largely due to loans, and now debtors were demanding payments in return, but Clear Channel / iHeartMedia was increasingly unable to pay. Facing lawsuits from creditors, in March 2018, the former Clear Channel filed for bankruptcy, and the amount of money it is due to pay is estimated around ten billion dollars, after getting $10 billion discharged in court. Its debt is thirteen times its cash flow. It's in a real bind, just 15 years from when it thought it could rule the world, and it probably won't be able to escape from -- deservedly so.

Could the same thing happen to Sinclair? The first of those prospects has happened: Sinclair was blocked on a slam-dunk deal that everyone -- even opponents -- thought would happen. But TV still remains the source of news for most Americans; that may change given the inroads that internet usage is making. But the problem with that is that you're trading one devil for another, or worse the two may feed off each other. The biggest companies on the Internet use ceaseless digital surveillance as their business model. In fact, upwards of two-thirds of all digital advertising dollars is held by just two companies -- Google, and Facebook. As more of local journalism gets eroded through the departure of advertising dollars, Sinclair is well-poised fill in the gap, and not in a good way.

Other options to break this bondage are needed. In the short term, one proposal may be to make American journalism, particularly local journalism, a non-profit enterprise. In some respects, it's already on its way, given the erosion of advertising from newspapers. Journalism could be funded by various other initiatives -- for example, one proposal from economist Dean Baker would allow taxpayers to take up to $150 off their taxes and use that money to donate to the nonprofit noncommercial media outlet or outlets of your choice.

In the longer term, we have to think about, and critically not be afraid to think about and consider alternatives for orienting our economy and economic relations into something far more humane. This is something that, in my estimation, gets precious little discussion. If I may be so bold, I would like to propose another talk for the forum committee to consider on this topic.

The following links were useful references for this presentation: https://www.ocregister.com/2018/03/21/sinclair-broadcast-groups-fake-news-campaign-attacks-real-journalism/

https://www.hollywoodreporter.com/news/right-leaning-sinclair-broadcast-group-solicits-political-donations-1081011

https://www.turnoff10.com/about-sinclair-broadcast-group.html

https://www.gq.com/story/sinclair-influence-local-news-segments

https://www.mediamatters.org/networks-and-outlets/sinclair-broadcast-group-inc

https://www.motherjones.com/politics/2017/10/ready-for-trump-tv-inside-sinclair-broadcastings-plot-to-take-over-your-local-news-1/

http://articles.baltimoresun.com/1993-04-20/news/1993110021_1_sinclair-smith-broadcasting-nationwide-communications

https://www.newsweek.com/sinclair-dragging-its-feet-running-ad-featuring-viral-deadspin-video-group-875787

https://www.sourcewatch.org/index.php/Sinclair_Broadcast_Group

https://www.advocate.com/media/2018/4/11/sinclair-broadcast-group-porn-prostitutes-and-propaganda

https://www.snopes.com/news/2017/07/11/sinclair-broadcast-group-propaganda/

https://reason.com/archives/2018/07/01/sinclair-broadcast-group

https://www.bloomberg.com/view/articles/2018-08-09/tronc-trnc-and-tribune-trco-may-get-their-deals-yet

https://www.linkedin.com/feed/news/major-media-merger-falls-apart-1562729/

http://sbgi.net

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