UPDATE 1-U.S. FCC approves Sinclair's TV deal with Allbritton

Thu Jul 24, 2014 6:43pm EDT

(Adds FCC officials' comments, background)

WASHINGTON, July 24 (Reuters) - The U.S. Federal Communications Commission on Thursday approved the $985 million deal between Sinclair Broadcast Group Inc and Allbritton Communications Co with divestitures and other conditions.

The FCC's Media Bureau said Sinclair will divest the TV station in Harrisburg, Pennsylvania, and give up the licenses of Allbritton stations in Birmingham, Alabama, and Charleston, South Carolina, delivering programming there through so-called multi-casting on the signal of stations Sinclair already owns.

Sinclair will also terminate a sharing arrangement in Charleston, South Carolina, the FCC said. Also, the originally proposed sidecar arrangements with Howard Stirk Holdings and Deerfield will not be included in the transaction, the regulators said.

Sinclair had proposed such concessions in March in its deal with the Allbritton family, which publishes Politico, as the regulators began planning a crack down on TV stations that share advertising sales staff.

The FCC, in a 3-2 vote with a Democratic majority, banned such joint services agreements in March, arguing it allowed companies to effectively control more than two TV stations in a market, which is prohibited by FCC rules.

Thursday's approval "exemplifies the careful scrutiny the (FCC) will provide to broadcast transactions that propose new combinations of sharing arrangements and financial entanglements between a dominant licensee and a so-called sidecar entity," FCC Media Bureau Chief William Lake said in a statement.

"The Media Bureau has demonstrated clearly that it will not allow such combined arrangements to undermine the local TV ownership rule, which is in place to ensure competition and diverse voices on the airwaves."

Republican Commissioner Ajit Pai said on Thursday that the three stations in Birmingham and Charleston that will have to go dark were "victims" of the FCC's crackdown. He added that the move might hurt, not promote diversity as the FCC hopes.

Of the Charleston WCIV TV station, Pai said: "Apparently the Commission believes that it is better for that station to go out of business than for Howard Stirk Holdings to own the station and participate in a joint sales agreement with Sinclair," explaining that Howard Stirk is an African-American owned broadcast company.

Sinclair has said the sales would not have a material impact on it or on the Allbritton deal because the stations are expected to contribute only about $21 million in pro forma earnings before interest, taxes, depreciation and amortization this year.

Sinclair struck a deal with Allbritton as a flurry of activity around local TV stations intensified. Last year, Gannett Co Inc bought Belo Corp for $1.5 billion and Tribune Co bought Local TV Holdings for $2.7 billion. (Reporting by Alina Selyukh; Editing by Chris Reese)

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