On May 8, 2017, Sinclair Broadcast Group Inc. announced that it agreed to acquire the Tribune Media Company for $6.6 billion. The transaction, if approved by shareholders and the U.S. government, would make Sinclair the nation's largest television broadcast company, giving it access to a far larger share of U.S. households than any other television broadcaster. The extent of the combined company's reach is a matter of dispute because, in addition to owning television stations, Sinclair is a party to numerous agreements to share services with other station owners in markets where Sinclair owns stations, as well as in two markets where it does not own stations. In evaluating the proposed transaction, federal authorities are likely to consider whether these shared services agreements might give Sinclair undue power over the rates charged television advertisers, the flow of information to television viewers, and the fees paid by cable and direct broadcast satellite companies to retransmit programming to their subscribers. This report provides background on the market structure and economic situation of the U.S. television industry. It then discusses the specific matters the Federal Communications Commission (FCC) and the Antitrust Division of the U.S. Department of Justice (DOJ) must examine in reviewing Sinclair's proposal to purchase Tribune. This report includes maps showing the television markets affected by the proposed transaction, detailed information about joint agreements to which Sinclair and Tribune are parties, and a chronology of key FCC actions related to broadcast station ownership that set the stage for Sinclair's acquisition offer. Sinclair Broadcast Group is currently one of the largest broadcast television groups in the United States. Sinclair reported more than $2.7 billion in total revenues in 2016. As of June 2017, Sinclair owned and/or operated 173 television stations in 81 local television markets. In addition, Sinclair owns four radio stations, two broadcast networks (TBD and Comet), and the Tennis Channel cable network. Sinclair is also the largest producer of local news in the country. For example, Sinclair's Connect to Congress initiative provides Sinclair's local television news anchors the ability to interview Members of Congress remotely via Sinclair's news bureau in Washington, DC. On June 30, 2017, the FCC's Media Bureau, acting under delegated authority from Chairman Ajit Pai, approved Sinclair's acquisition of 14 stations in eight television markets from Bonten Media Group. As part of the transaction, Sinclair agreed to take over five agreements under which Bonten shares services with four stations it does not own. As of the publication date of this report, the Bonten transaction was awaiting approval of federal antitrust authorities. If it is completed without divestitures, Sinclair would own 187 television broadcast stations in 89 local markets, and would be a party to 60 shared services agreements with stations it does not own. Tribune Media owns or operates 42 broadcast television stations, the cable network WGN America, the radio station WGN (AM) in Chicago, and Los Angeles-based Tribune Studios, which produces original programming for Tribune's stations and cable network. In August 2014, Tribune Media spun off its publishing business, including several daily newspapers, into a separate company. Broadcast television stations such as those owned by Sinclair and Tribune have two primary sources of revenue. They sell advertising, charging rates based on the number and type of viewers who watch their programs. They also may charge cable and satellite operators--together referred to in statute as multichannel video program distributors (MVPDs)--for the right to retransmit the stations' signals to the operators' subscribers. The research firm Kagan estimates that in 2016, U.S. broadcast stations collectively earned about $30.6 billion in revenues, with 67% coming from advertising and 26% from retransmission consent. Television broadcasters are part of a complex television industry ecosystem (see Figure 1 ) in which the various participants may simultaneously be competitors, suppliers, customers, and business partners. Many television broadcasters have sought greater scale through mergers, acquisitions, and joint agreements, as greater scale may provide leverage in dealing with other industry participants. For example Stations sell air time to both local and national advertisers. In the local market, control of multiple stations may enable a broadcaster to command higher advertising rates than competitors. In the national market, a firm owning stations in many local markets may be better positioned to bargain with large advertisers such as automobile manufacturers and retail chains. Stations may purchase rights to programming from television and movie studios and sports leagues. A firm owning many stations may have greater bargaining power with respect to program owners than a firm with few stations. Consolidation among MVPDs has left a relatively small number of cable and satellite operators serving customers nationwide. This has encouraged consolidation among broadcasters, who fear that the MVPDs' greater size will allow them to bargain for lower retransmission consent fees. For example, during retransmission consent negotiations with DISH, a satellite operator, in August 2015 Sinclair briefly withheld permission for DISH to retransmit its broadcast signals in 79 different markets in 36 states and Washington, DC. For DISH, losing access to Sinclair's stations risked putting it at a disadvantage against competing cable and satellite operators that were able to retransmit Sinclair's programming during the blackout. At the same time, television broadcasters are facing an erosion of their markets as increasing numbers of viewers watch video programming through online video subscription services such as Netflix, Hulu, or Amazon Prime, rather than subscribing to MVPDs or receiving stations' broadcasts over the air. This potential loss of viewership affects broadcast television stations' advertising revenue, which is based on the number of and demographics of people viewing the stations' programming, and retransmission consent revenue, which is partly based on the number of each MVPD's subscribers. In the three months prior to Sinclair's announcement of its agreement to purchase Tribune, the FCC ended or reversed several previous policies that might otherwise have prevented the merger from taking place. One, related to the broadcast incentive auction, was procedural. The other two, related to how the FCC attributes broadcast television station ownership, were reversals of policies established under former FCC Chairman Tom Wheeler. In 2016, the FCC began to administer an auction in which broadcast television station licensees could submit voluntary bids to relinquish or modify their spectrum usage rights in exchange for a portion of the auction proceeds. Starting January 12, 2016, after stations indicated to the FCC whether or not they would participate in the auction, they were subject to a "quiet period" during which they could not communicate their bidding strategies with each other. This barred station owners from negotiating transactions or submitting them to the FCC. After the auction ended on March 31, 2017, the FCC lifted the quiet period, and broadcast stations were again free to negotiate mergers and acquisitions. Broadcast stations that outsource management to other stations are known as "sidecars." In March 2014, the FCC's Media Bureau issued a public notice stating that it will closely scrutinize any proposed transaction that includes "sidecar" agreements in which two (or more) broadcast stations in the same market enter into an arrangement to share facilities, employees, and/or services, or to jointly acquire programming or sell advertising and enter into an option, right of first refusal, put/call arrangement, or other similar contingent interest, or a loan guarantee. In February 2017, the FCC's Media Bureau rescinded this guidance. The cancellation of this guidance reduced the level of scrutiny the FCC will apply to transactions such as Sinclair's purchases of Bonten and Tribune Media. As described in Table A-1 , Sinclair, Bonten, and Tribune Media all have agreements with third parties to manage those parties' broadcast television stations. The Consolidated Appropriations Act, 2004, P.L. 108-199 , directed the FCC to adopt rules that would cap the reach of a single company's television stations at 39% of U.S. television households. In addition, Congress exempted this national ownership cap from the FCC's required review of its media ownership rules every four years. At the time Congress enacted this law, an FCC rule, originally adopted in 1985, discounted the number of television households reached by stations operating in the Ultra High Frequency (UHF) band by half in measuring a station owner's reach. This adjustment reflected the physical limitations of UHF signals at the time the rule was adopted. However, on June 12, 2009, broadcast television stations completed a transition from analog to digital service pursuant to a statutory mandate. As a result of this switch, UHF stations had a technological advantage relative to VHF stations, and more broadcast television licenses began to operate on these frequencies. By December 2009, 73% of the 1,392 commercial stations operated in the UHF band. In September 2013, under then-Acting FCC Chairwoman Mignon Clyburn, the FCC proposed eliminating the UHF discount, citing the completed transition to digital broadcasting. In September 2016, the FCC, under then-Chairman Thomas Wheeler, eliminated the UHF discount effective November 2016. In a dissenting statement, then-Commissioner Ajit Pai contended that the FCC lacked the authority to review the UHF discount without simultaneously reviewing the national audience cap. In April 2017, after Commissioner Pai became chairman, the FCC reinstated the UHF discount. Without this action, Sinclair's proposed purchase of Tribune Media would violate the ownership cap established in 2004. For more information about the historical developments of these rules, see Table A-2 . Both an antitrust agency (either DOJ or the Federal Trade Commission) and the FCC must approve Sinclair's purchase of Tribune Media before it can close. Although neither antitrust agency has publicly announced its role, reports indicate that DOJ is reviewing the transaction. The principal law governing mergers, acquisitions, and joint ventures is Section 7 of the Clayton Antitrust Act of 1914 (15 U.S.C. SS18). Under that law, the purpose of DOJ's review is to ensure that Sinclair's acquisition of Tribune Media will not substantially reduce competition. The burden of proof to demonstrate that the proposed transactions might be anticompetitive would rest with DOJ. The agency's options include allowing the deal to go forward, negotiating a consent agreement with Sinclair that includes provisions to maintain competition, or seeking to stop the transaction by requesting a preliminary injunction in federal court. While the DOJ may disclose information gathered in its review to any duly authorized committee or subcommittee of Congress, it may not disclose the information to the public. Information the DOJ gathers in the course of merger investigations is exempt from Freedom of Information Act disclosure requirements. Section 310(d) of the Communications Act of 1934 (47 U.S.C. SS310(d)) prohibits the transfer, assignment, or disposition of any license of a broadcast station unless the FCC determines that the public interest, convenience, and necessity will be served. Transactions that present complex legal, economic, or other public interest issues likely to elicit a significant amount of public comment are subject to review by the FCC's commissioners. FCC staff has delegated authority to act on routine transactions, but must refer matters involving novel questions of fact, law, or policy to the full commission for review. The FCC's rules do not stipulate who makes the determination of whether the transactions are routine or present novel questions of law or policy. Two recent multibillion-dollar transactions involving the transfer of broadcast television station licenses, Gannett Company Inc.'s acquisition of Belo Corporation for $2.2 billion and Nexstar Media Group Inc.'s acquisition of Media General Inc. for $4.1 billion, were both reviewed by the FCC's Media Bureau staff rather than the full commission. Three FCC commissioners subsequently made statements about their desire to have had more input into decisions that were made by agency staff under delegated authority at the time. It is possible that the Media Bureau, rather than FCC commissioners, will review Sinclair's proposed acquisition of Tribune Media. In reviewing broadcast license transfers, the FCC conducts a three-part test: 1. Would the proposed transactions comply with specific provisions of the Communications Act of 1934, other applicable statutes, and the FCC's rules? 2. If the transactions would not violate statutes or rules, would they result in public interest harms by substantially frustrating or impairing the objectives or implementation of the Communications Act or related statutes? 3. Are there potential public interest benefits from the proposed transaction that would outweigh any potential public interest harms, or vice versa? The FCC counts as benefits several broad aims of the communications laws, including accelerating private-sector deployment of advanced services, ensuring a diversity of information sources and services to the public, managing spectrum in the public interest, and assessing whether the transaction will affect the quality of communications services or will result in the provision of new or additional services to consumers. Benefits must be merger-specific and verifiable. In addition, the benefits must flow to consumers. The FCC's review differs from that of DOJ in several respects. In contrast to DOJ, the FCC is to consider whether a transaction will enhance, rather than merely preserve, existing competition, and often takes a more expansive view of potential and future competition in analyzing that issue. Furthermore, in the FCC's review, the applicants, rather than the FCC, bear the burden of proving that the proposed transaction serves the public interest. In reviewing the proposed Sinclair-Tribune Media transaction, the FCC is to examine whether it is consistent with the commission's local media ownership rules. The FCC has distinct sets of rules governing ownership of multiple media outlets in a single market. These include, but are not limited to, (1) local radio ownership rules; (2) radio/television cross-ownership rules; and (3) local television ownership rules (known as the television duopoly rules). The purpose of the local media ownership rules is to promote diversity, localism, and competition by restricting the number of media outlets that a single entity may own or control within a geographic market. The U.S. Supreme Court has supported diversity as a public interest goal, affirming that "the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public" and "assuring that the public has access to a multiplicity of information sources is a governmental purpose of the highest order, for it promotes values central to the First Amendment." Localism addresses whether broadcast stations are responsive to the needs and interests of their communities. In evaluating the extent of competition, the FCC considers whether stations have adequate commercial incentives to invest in diverse news and public affairs programming tailored to serve viewers within their communities. This differs from the competition analysis conducted by antitrust authorities, which primarily considers the prices stations charge advertisers to air commercials during programming, and, in the case of television stations, the prices they charge cable and satellite operators for the retransmission of broadcast programming. Section 202(h) of the Telecommunications Act of 1996 directs the FCC to review its media ownership rules every four years to determine whether they are "necessary in the public interest as a result of competition," and to "repeal or modify any regulation it determines to be no longer in the public interest." Section 257(b) of the act directs the FCC to promote policies favoring the diversity of media voices and vigorous economic competition. The local radio ownership rules limit ownership of radio stations within a single market, as defined by the Nielsen Company. These local radio markets, called "Metros," generally correspond to the metropolitan statistical areas defined by the U.S. government's Office of Management and Budget (OMB), but are subject to exceptions based on historical industry usage or other considerations at the discretion of Nielsen. In contrast to television markets, radio markets do not include every U.S. county. The rules were most recently reviewed by the FCC in 2016. Sinclair is the licensee of three radio stations in the Seattle radio market, and has an application pending with the FCC to acquire a fourth radio station. The acquisition of Tribune Media would not affect the Seattle radio market, but it would give Sinclair control of WGN-AM in Chicago. Because Sinclair's ownership of radio stations in both markets would fall within the FCC's limits, the Tribune acquisition would be consistent with the local radio ownership rules. The radio/television cross-ownership rules limit ownership of broadcast radio and television stations serving the same geographic area. The rules specify conditions regarding the proximity of radio and television stations that trigger the application of the rules, and how to count the number of separately-owned media outlets in a market, including television stations, radio stations, newspapers, and cable systems. The FCC uses broadcast signals to determine when the rules are triggered and a combination of broadcast signals and markets to determine how to count the independent media outlets. In its most recent review of the cross-ownership rules, the FCC concluded the rules promote the diversity of viewpoints. Under the rules, an entity may own up to four radio stations and two television stations within a television market, as long as 10 independently owned media outlets remain. In Chicago, where Sinclair does not currently own any stations, Sinclair's purchase of Tribune's television and radio station would be consistent with this rule. In Seattle, the radio/television cross-ownership rules would permit Sinclair to acquire a fourth radio station while retaining ownership of two television stations, given that more than 10 independently owned media voices would remain in the market after the merger. As illustrated in Figure 2 , in total, there are 14 different markets in which both Sinclair and Tribune own and/or operate broadcast television stations, including two in which the stations concerned are operated but not owned by Tribune. Figure 3 illustrates the cluster of East Coast television markets in which both Sinclair and Tribune own and/or operate stations and the congressional districts wholly or partially located within those markets. The FCC's review regarding whether the proposed acquisition of Tribune's stations is consistent with its media ownership rules, and the DOJ's review regarding whether the proposed acquisitions could impede competition, may lead the agencies to come to different conclusions about Sinclair's need to divest or swap stations. The FCC's local television ownership rules permit an entity to own or control two television stations in the same television market so long as the overlap of the stations' signals is limited and the joint control does not violate the "top four/eight voices test" (described in Table 1 ). The FCC uses broadcast television signals to determine when the rules are triggered, and uses Designated Market Areas (DMAs), as determined by The Nielsen Company, in counting the number of voices available to viewers. Sinclair's acquisition of Tribune's television stations in both the Washington, DC, and Milwaukee television markets would not be inconsistent with the FCC's duopoly rules. Tribune's station in Washington, DC, WDCW, is an affiliate of the CW television network and not among the four top-rated television stations in the market. After the merger, eight independently owned and operated television stations would remain. Although Sinclair already owns two television stations in Milwaukee, one of them, WCGV-TV, an affiliate of the MyNetwork television network, successfully bid to relinquish its license in the broadcast incentive auction and will go off the air. Sinclair is requesting a temporary waiver of the FCC's duopoly rules until WCGV goes off the air. Table 2 illustrates Sinclair's estimated advertising and retransmission consent revenue shares within these two markets before and after its proposed merger with Tribune. In the Seattle-Tacoma television market, Sinclair and Tribune each own two television stations. In this market, Sinclair would need to divest two stations in order to comply with the local television ownership rules. In 10 television markets where Sinclair owns television stations, FCC duopoly rules would preclude Sinclair from purchasing Tribune stations absent divestitures. Table 3 illustrates Sinclair's estimated advertising and retransmission consent revenue shares within nine of these markets before and after its proposed acquisition. In three of the markets listed in Table 3 --Seattle-Tacoma, WA; Salt Lake City, UT; and Oklahoma City, OK--Sinclair would own a total of four stations after merging with Tribune, including ABC and FOX affiliates in Seattle-Tacoma, WA; CBS and FOX affiliates in Salt Lake City, UT; and NBC and FOX affiliates in Oklahoma City, OK. In an additional three markets--St. Louis, MO; Portland, OR; and Greensboro-High Point-Winston Salem, NC--Sinclair would own a total of three stations after merging with Tribune. Sinclair would own ABC and FOX affiliates in the St. Louis and Greensboro-High Point-Winston Salem television markets. In the remaining four markets--Harrisburg-Lancaster-Lebanon-York, PA; Grand Rapids-Kalamazoo-Battle Creek, MI; Richmond-Petersburg, VA; and Des Moines-Ames, IA--Sinclair would own two stations following its acquisition of Tribune. In three of those markets, Sinclair would own both CBS and FOX affiliates. In Des Moines-Ames, Sinclair would own NBC and FOX affiliates. Many owners of commercial broadcast stations have relationships that fall short of the FCC's definition of common ownership, yet allow the owner of one station to exert substantial influence over the operation and finances of another station. To minimize such behavior, the FCC has developed attribution rules "to identify those interests in or relationships to licensees that confer a degree of influence or control such that the holders have a realistic potential to affect the programming decisions of licensees or other core operating functions." Joint sales agreements (JSAs) enable the sales staff of one broadcast station to sell advertising time on a separately owned station within the same local market. In 2014, the FCC adopted rules specifying that television JSAs allowing the sale of more than 15% of the weekly advertising time on a competing local broadcast television station are attributable as ownership or control. Congress subsequently twice extended the period by which parties must comply with these rules, ultimately extending the deadline to September 30, 2025. In August 2016, the FCC adopted new disclosure requirements for all joint operating agreements, broadly encompassed by the term "shared services agreements" (SSAs) among broadcast television stations. Had publication of the proposed requirements been approved by OMB, each station that is a party to an SSA, whether in the same or different television markets, would have been required to file a copy of the SSA in its online public inspection file. The FCC declined to make SSAs attributable, but stated that it might do so later. In November 2016, the FCC placed its notice in the Federal Register seeking comment to the change in its rules to require disclosure of shared services agreements. On January 17, 2017, the FCC resubmitted its request to OMB to incorporate revisions to the estimated number of stations/entities that would need to comply with the requirement. On January 27, 2017, however, the FCC withdrew its information collection request from consideration. Thus, broadcast television stations are not required to disclose SSAs to the FCC. As part of Sinclair's acquisition of Tribune Media, Tribune's sidecar stations would become Sinclair's sidecar stations. Table 4 lists the television markets in which the proposed acquisition would enable Sinclair to increase the number of stations it controls due to sidecar agreements it would assume from Tribune. In both Norfolk-Portsmouth-Newport News, VA, and Wilkes Barre-Scranton-Hazleton, PA, Sinclair would take over from Tribune the operations of stations licensed to Dreamcatcher Broadcasting. Neither the FCC's duopoly rules nor its attribution rules would preclude Sinclair from operating Dreamcatcher's stations. If, however, Tribune owned the stations outright, current FCC rules would preclude Sinclair from purchasing them, as it already owns one station in the Virginia market and operates but does not own three stations in the Pennsylvania market. In Salt Lake City, where Sinclair would purchase a FOX affiliate from Tribune, Sinclair has sharing agreements with KENV-DT, an NBC affiliate licensed to Intermountain West. Sinclair could continue to operate KENV without running afoul of the FCC's ownership regulations. As the FCC's and DOJ's reviews of previous broadcast television station transactions illustrate, the two agencies have different standards of review, particularly with respect to the treatment of sidecars. In February 2014 comments filed with the FCC, the DOJ stated that "combinations of SSAs, [local news service] agreements, purchase options, substantial loan guarantees, or other engagements can confer similar degrees of controls as JSAs, or may preserve some competition between the participants, depending on their precise terms." The DOJ recommended that the FCC "scrutinize agreements on a case-by-case basis and take action where those agreements do not serve the public interest." In the case of Gannett Company Inc.'s acquisition of Belo Corporation, local FCC media ownership rules did not permit Gannett to acquire Belo's stations in 5 of the 10 markets where Belo owned stations. The FCC permitted Gannett to transfer these stations to sidecar companies. When the DOJ determined that antitrust laws would not allow Gannett to purchase Belo's station in St. Louis, however, it would not permit Gannett to transfer the station to a sidecar company. In the case of Nexstar Media Group Inc.'s acquisition of Media General Inc., local FCC media ownership rules precluded Nexstar from acquiring Media General's stations in seven television markets, while the DOJ found that antitrust laws precluded acquisitions in six of those markets. The DOJ prohibited Nexstar from transferring the stations in those six markets to sidecar stations. In the seventh market, the FCC allowed Nexstar to assume control of Media General's shared services agreements with sidecar stations. The FCC also allowed Nexstar to assume control of sharing and marketing agreements in seven additional markets. In the case of the Sinclair-Tribune transaction, both the FCC and DOJ would likely review the impact of Sinclair's acquisition of Tribune's stations in the 12 markets where Sinclair already owns stations. As described in Table 3 , FCC media ownership rules would require Sinclair to divest television stations in 10 television markets. A key issue for the DOJ will be whether it would permit Sinclair to divest those stations to sidecar companies. Secondly, the FCC's local media ownership rules would permit Sinclair to assume Tribune's sharing agreements in the Norfolk-Portsmouth-Newport News, VA, and Wilkes Barre-Scranton-Hazleton, PA, television markets. Thus, a second key issue for DOJ to resolve is whether Sinclair's operational relationships with these stations after its proposed transaction would be anticompetitive. According to press reports, Sinclair CEO and President Christopher Ripley predicted that if regulators require divestitures, they would most likely be in the Salt Lake City, UT; St. Louis, MO; and Wilkes Barre-Scranton, PA, television markets. Mr. Ripley further stated that Sinclair would try to convince DOJ that the definition of the advertising market in which Sinclair competes includes local advertising on cable systems as well as local broadcast stations. If Sinclair succeeds, this would mark a change in DOJ's analysis of broadcast television transactions. The more broadly the DOJ defines the product market in which Sinclair competes, the lower its estimate of Sinclair's potential post-transaction market share would be, and the lower the likelihood that DOJ would require Sinclair to divest stations. In addition to the local media ownership rules that limit the ability of one company to own multiple media outlets within a DMA, the FCC has national media ownership rules that limit the ability of one company to own multiple broadcast stations throughout the United States. As Table 5 illustrates, the FCC's reinstatement of the UHF discount set the stage for Sinclair's proposed acquisitions of Bonten Media and Tribune. Due to rounding, the reach estimates, based on data from the Nielsen Company, are approximate. Absent the discount, counting only the stations that Sinclair owns, including those acquired from Bonten Media, Sinclair currently has a national reach of 38.8% of U.S. television households. With the UHF discount, Sinclair has a national reach of 23.94% of U.S. television households. In two television markets, Gainesville, FL, and Wilkes Barre-Scranton, PA, Sinclair operates but does not own stations. Including these stations, and excluding the UHF discount, Sinclair has a reach of 39.4%, which is in excess of the national ownership cap for owned stations. Including the UHF discount, Sinclair has a national reach of 25.68% of U.S. television households. If Sinclair acquires stations owned by Tribune with no divestitures, its owned stations would have a reach of 71.59% of U.S. television households, absent the UHF discount. With the discount, Sinclair's owned stations would have a reach of 45.29%. Although, as Sinclair noted in its application, this reach would exceed the 39% cap, it stated that it would take necessary actions to comply with the terms of its agreement with Tribune, and the national television ownership limit (including the UHF discount), in order to obtain FCC approval of the transaction. If the FCC changes or proposes to change the national television ownership rules, Sinclair would amend its application. Including the stations that Sinclair operates but does not own in Wilkes Barre-Scranton, PA, as well as the station Sinclair owns but does not operate in Gainesville, FL, its reach absent the UHF discount would be 72.1%, and its reach with the discount would be 47.04% of U.S. television households. In a presentation to investors about its Bonten and Tribune transactions, Sinclair states that the transactions would give it "72% household coverage across 108 markets." In reviewing Sinclair's proposed merger with Tribune, the FCC might take several issues into consideration. If in a rulemaking the FCC were to revise the national ownership cap, it might not require Sinclair to divest any broadcast television stations. Likewise, if the FCC were to decrease the cap or attribute sidecar stations, Sinclair would need to sell its stations to third parties that do not have long-term business relationships with the company. If, in a rulemaking, the FCC were to choose not to attribute sidecar stations for the purpose of enforcing the national ownership caps, it might permit Sinclair to operate, but not own, stations in additional markets. DOJ might consider whether the national scale of Sinclair's broadcast television operations, in combination with Sinclair's local scale of operations, might limit competition in the markets for national spot advertising and retransmission consent negotiations. If DOJ were to decide that they did, DOJ might require further divestitures. As discussed in " Communications Law Concerns ," when reviewing mergers, the FCC counts as benefits several broad aims of the communications laws, including ensuring a diversity of information sources and services to the public. In addition, among the FCC's general policy goals is the promotion of localism--that is, the responsiveness of broadcast stations to the needs and interests of their communities. Among the merger-specific benefits Sinclair presents to the FCC in its application, Sinclair states that the transaction would enable it to invest in and increase the amount of local news programming aired on the stations it would acquire. In reviewing the merger, the FCC might consider whether the number of stations Sinclair would own and/or operate both within local markets and nationwide would promote the FCC's goals of localism and diversity. Critics of broadcast licensees that own and/or operate multiple broadcast television stations within a market state that the newscasts on these stations are composed of the same news stories airing on different stations. Therefore, they maintain, such arrangements do not promote the FCC's public policy goals of promoting diverse sources of news information. Broadcasters, however, claim that such arrangements enable stations to air news programming that they could not afford to produce on their own, thereby increasing the total amount of local news available in communities. Reports indicate that Sinclair has an internal corporate policy of requiring its stations throughout the country to air centrally produced video segments known as "must runs." Critics claim that this practice inhibits stations' ability to air news programming that is responsive to the needs and interests of their local communities. Others counter that Sinclair's practice is routine, and that its national presence offers a countervailing point of view to other national media outlets. The ability of broadcast television stations to produce and distribute local news sets them apart from other electronic media, such as online video distributors, national television networks, and MVPDs. Thus, in addition to the traditional competition analysis that both the DOJ and FCC are to undertake when reviewing the Sinclair-Tribune merger, the potential scale and scope of Sinclair's news operations post-merger will require a public interest review by the FCC. Moreover, the timing of the FCC's review of its media ownership and attribution rules will have a large impact on what conditions, if any, the agency might impose on Sinclair in order to complete the transaction.

Summary:
On May 8, 2017, Sinclair Broadcast Group Inc. announced that it agreed to acquire the Tribune Media Company for $6.6 billion, including $3.9 billion for Tribune's stock, and the assumption of $2.7 billion of Tribune's debt. The transaction, if approved by shareholders and the U.S. government, would make Sinclair the nation's largest television broadcast company, giving it access to a far larger share of U.S. households than any other television broadcaster. Both the U.S. Department of Justice (DOJ) and the Federal Communications Commission (FCC) must approve Sinclair's transactions before they can close. The DOJ is to review the transaction to ensure that it will not substantially reduce competition. The FCC is to review whether the transaction would (1) violate FCC broadcast media ownership rules and (2) serve the public interest. The Sinclair-Tribune transaction potentially runs afoul of two FCC rules regarding broadcast ownership: local television ownership rules (sometimes referred to as the "duopoly" rules), which limit common ownership of television stations serving the same geographic region; and the FCC's national television ownership rules, which cap the reach of a single company's television stations to 39% of U.S. television households. Recent rule and policy changes determining how the FCC defines ownership and television household reach, however, may allow Sinclair to own and/or operate more Tribune stations than it might otherwise. In February 2017, the FCC's Media Bureau rescinded previous guidance that it would closely scrutinize any proposed transactions that included certain types of operational and financial agreements between two separately owned stations. In April 2017, the FCC reversed a previous decision to eliminate the "UHF discount," which discounts by half the total number of television viewers reached by UHF stations for the purpose of enforcing its national ownership rule. Sinclair is the largest producer of local news in the country. If government agencies approve Sinclair's acquisition of Tribune without modifications, the 233 stations that would be owned or operated by Sinclair could reach 72% of the 114.7 million households receiving television over-the-air or via cable or satellite. The two companies own or operate stations in 14 common markets. Current FCC ownership rules address the overlaps in 12 of those 14 markets. Nevertheless, current FCC rules do not preclude Sinclair from entering into operational and financial agreements with third-party stations in two of those 12 markets: Wilkes-Barre, PA, and Norfolk-Portsmouth-Newport News, VA. The DOJ might preclude such arrangements on antitrust grounds. The ability of broadcast television stations to produce and distribute local news sets them apart from other electronic media, such as online video distributors, national television networks, and cable and satellite operators. Thus, in addition to the traditional competition analysis that both the DOJ and FCC are to undertake when reviewing the Sinclair-Tribune transaction, the potential scale and scope of Sinclair's news operations will require a public interest review by the FCC.