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. §18). Under that law, the purpose of DOJ's review is to ensure that Sinclair's acquisition of Tribune Media will not substantially reduce competition.