Justice Department Investigating Broadcasters Over Ad Sales Communications

By Ted Johnson

LOS ANGELES (Variety.com) – WASHINGTON — The Justice Department is investigating whether communications between advertising teams at TV station groups like Sinclair Broadcast Group and Tribune Company violated antitrust laws, a source familiar with the probe confirmed to Variety.

The ’s investigation, first reported by the Wall Street Journal, grew out of the Antitrust Division’s examination of Sinclair’s proposed merger with Tribune Co., the source said. The $3.9 billion deal, which would create a broadcast giant with more than 200 stations, is now in doubt, after the FCC voted last week to send the merger to an administrative law judge for review.

A spokesman for Tribune declined to comment. A Sinclair spokesman did not immediately return a request for comment, but earlier told the Journal , “It is our policy not to comment on a potential investigation. It is our understanding that this is not specific to Sinclair, but focuses on the larger broadcast industry.”

A spokesman for the Justice Department had no comment.

At issue is whether communication between advertising sales teams led to higher rates for advertising spots.

The Justice Department never gave the green light to Sinclair’s merger, despite speculation that approval was imminent.

Sinclair’s merger with Tribune faces an Aug. 8 deadline for either side to walk away from the deal. If they proceed with their merger plans, they would likely face months, if not a year, of proceedings before the administrative judge. Other companies who have faced such a prospect have abandoned their plans.

The FCC contends that Sinclair may have misrepresented its plans to divest stations as a way to comply with media ownership rules. The commission is asking the judge to determine whether a series of proposed station sales were in fact “sham” transactions to skirt the rules.

Sinclair has denied that it misled the FCC. A spokesman said last week, “at no time have we withheld information or misled the FCC in any manner whatsoever with respect to the relationships or the structure of those relationships proposed as part of the Tribune acquisition. Any suggestion to the contrary is unfounded and without factual basis.”