FCC Watchdog Found No Favoritism Toward Sinclair, Pai Says

(Bloomberg) -- The U.S. Federal Communications Commission’s watchdog has rejected allegations of favoritism by the agency’s chairman toward Sinclair Broadcast Group Inc.

Ajit Pai drew scrutiny in part for his meetings with Sinclair executives after the election of President Donald Trump, who selected Pai to lead the agency. Democrats in November requested a review by Inspector General David Hunt.

Following an investigation, “we found no evidence, nor even the suggestion, of impropriety, unscrupulous behavior, favoritism towards Sinclair,” Hunt concluded in a report released Monday.

“To the contrary, actions taken by Chairman Pai in the rulemakings identified in the letters from Congress are, as he stated in his interview, consistent with his long-held, and publicly espoused, policy beliefs,” Hunt wrote.

He cited in particular Pai’s decision to seek a hearing on the Maryland-based broadcasters’ proposed acquisition of Tribune Media Co., which effectively killed the deal, as evidence of Pai’s objectivity.

“The suggestion that I favored any one company was absurd, and today’s report proves that Capitol Hill Democrats’ politically motivated accusations were entirely baseless,” Pai said in an emailed statement.

Pai’s FCC has acted to benefit broadcasters including Sinclair. The agency loosened restrictions on owning multiple television stations in a market, and eliminated a requirement for them to keep a local studio. It also reduced scrutiny of how stations share services and revenue and is considering further easing broadcast ownership restrictions.

“I have called on the FCC for many years to update its outdated media ownership regulations to match the realities of the modern marketplace,” Pai said in his statement.

Sinclair proposed its failed $3.9 billion bid for Tribune after the FCC restored an obsolete rule that lets companies count just half the audience for some stations, when calculating compliance with a limit on national reach. The deal collapsed after Pai criticized Sinclair’s actions. Tribune withdrew, saying Sinclair had mishandled negotiations with federal officials.

Hunt’s 69-page report detailed contacts between Pai, Trump and members of his administration. Pai met with Trump in January 2017 at Trump Tower before Pai was chairman, and Sinclair wasn’t mentioned, according to the inspector general.

Trump’s son-in-law and adviser Jared Kushner and Pai also communicated by email and phone when Pai was chairman, according to the report. In a May 5, 2017, email Kushner said, “Just tried you – had a quick thing to run by you,” according to the report. Pai didn’t recall the conversation, the report said. Sinclair announced its deal for Tribune three days later, on May 8, 2017.

On July 16, Pai got a phone call from Don McGahn, the White House counsel, which the report characterized as “a status inquiry.” Pai on July 16 issued a statement questioning the legality of Sinclair’s plans, and proposed sending the $3.9 billion deal to the hearing. Pai and McGahn “are long-time acquaintances,” the report said.

Representative Frank Pallone, a New Jersey Democrat who requested the inspector general’s probe, said in an emailed statement on Monday that “questions remain regarding the chairman’s personal communications, which the IG noted were beyond his reach, and his conversations with Jared Kushner and Don McGahn.”

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