Sinclair Said to Be Fined $13.3 Million Over Undisclosed Ads

(Bloomberg) -- The U.S. Federal Communications Commission has voted to fine Sinclair Broadcast Group Inc. $13.3 million for running programming on scores of TV stations without telling viewers the messages were sponsored by another business, according to a person briefed on the matter.

Sinclair, which has nearly 200 stations and wants to buy Tribune Media Co. stations in 33 markets, broadcast the programming for the Huntsman Cancer Foundation, which raises funds for the Huntsman Cancer Institute. The FCC determined that the programming, which included promotional material for the foundation, was aired improperly more than 1,700 times and appeared on 64 Sinclair stations and 13 other stations in 2016, the person said.

The Huntsman Cancer Foundation bought ads from Sinclair, and the TV company offered to produce programming touting the center “as a value-added,” the foundation’s president Susan Sheehan said in an interview. The foundation is based in Salt Lake City, Utah, raises funds for cancer research and treatment at the institute. The foundation didn’t renew its agreement after learning that Sinclair had aired programming without proper identification, Sheehan said.

“That shook us up,” Sheehan said in an interview. “The stories going out the door were labeled.”

FCC commissioners approved the fine in voting behind closed doors, said the person, who asked not to be identified because the FCC hasn’t announced it yet. It isn’t clear when the agency will publicly release its order. The fine was earlier reported by Reuters. Brian Hart, an FCC spokesman, declined to comment, as did Rebecca Hanson, a Sinclair spokeswoman.

Sinclair needs approval from the FCC and Justice Department for its $3.9 billion deal for the 42 Tribune Media Co. stations. The company, based in Hunt Valley, Maryland, would reach about 72 percent of U.S. households.

Under FCC Chairman Ajit Pai, a Republican chosen by President Donald Trump, the agency has relaxed broadcast ownership restrictions, which could clear the way for Sinclair’s Tribune bid.

“Sinclair has demonstrated it can’t be trusted to follow the law or FCC rules. It shouldn’t be rewarded for this bad behavior,” Karl Frisch, executive director of the policy group Allied Progress, said in an emailed statement. "The FCC needs to do its job and stop this merger.”

Federal law requires broadcasters to disclose to their listeners or viewers if matter has been aired in exchange for money.

Last year, Sinclair paid the FCC $9.5 million to settle an investigation it improperly negotiated fee payments from pay-TV providers on behalf of dozens of stations that it did not control, as it was negotiating for its own stations, the FCC said. In 2007, the FCC proposed a $36,000 fine for airing an election-year talk show without telling viewers it was supplied by political commentator Armstrong Williams.

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