Sign up for a free Courant newsletter for a chance to win $100 P.C. Richard gift card

Under Sinclair, WGN could be 'Chicago's very own' no more

For nearly a century, stations bearing the call letters WGN have been the broadcast reflection of a city, chronicling, shaping and beaming its culture through the airwaves as Chicago's very own.

Chicagoans may be in for a culture shock if politically conservative Sinclair Broadcast Group completes its proposed acquisition of Tribune Media.

The deal, which is pending approval by federal regulators, would create the largest television station group in the U.S. and, critics contend, turn Tribune's flagship properties — WGN-TV, WGN Radio and cable channel WGN America — into Hunt Valley, Md.'s very own platform for a partisan agenda.

"They will shift the local news that WGN puts its imprimatur on to the right," said Angelo Carusone, president of Media Matters, a progressive media watchdog organization. "It will happen with on-air talent and the staff behind the scenes."

If the deal is consummated and Sinclair's history is any indication, WGN-Ch. 9, a station best known for broadcasting the Chicago Cubs, Bozo the Clown and decades of Chicago-centric programming, will be airing must-run Sinclair segments such as "Terrorism Alert Desk" and "Bottom Line With Boris," a daily opinion piece by combative former Donald Trump surrogate Boris Epshteyn.

That should make for some interesting segues into avuncular WGN-TV weatherman Tom Skilling's eternally sunny reports.

Sinclair agreed to buy Chicago-based Tribune Media in May for $3.9 billion, plus the assumption of $2.7 billion in debt, swallowing up a major station group that includes WGN, KTLA-TV in Los Angeles and WPIX-TV in New York and moving its conservative brand into the top three markets in the U.S.

The proposed merger has generated static from liberal groups, media advocates and even comedian John Oliver, who last month unleashed a scathing 20-minute takedown on his HBO show, "Last Week Tonight." The former "Daily Show" correspondent warned that Sinclair's right-leaning editorial views will unduly influence local news at Tribune Media's 42 TV stations.

Some conservative broadcasters also are lining up against the deal over concerns about media concentration. The combined Sinclair-Tribune entity would have more than 200 stations, reaching 72 percent of U.S. TV households.

Sinclair executives declined to be interviewed for this story. Tribune Media spokesman Gary Weitman declined to comment or to make executives available for interviews, citing the pending transaction.

The deal, which requires approval from the Federal Communications Commission and the Department of Justice, could close by early next year.

Launched with a single UHF station in Baltimore in 1971, Sinclair has grown to 173 TV stations in 81 markets, ranging from Washington, D.C., to Ottumwa, Iowa. The closest stations to Chicago are in Champaign and Milwaukee. The company also owns the Tennis Channel, several digital networks and four Seattle radio stations, among other assets.

Sinclair produces a number of segments that every station in the chain is required to air. They include daily dispatches from the Terrorism Alert Desk and nine opinion pieces a week from Epshteyn.

A recent Epshteyn segment lauded the appointment of his "good friend" Anthony Scaramucci as White House communications director.

"The reason his appointment matters is that there is going to be a new approach to dealing with the media from the White House," Epshteyn said. "There will now be a better working relationship between the White House and the press."

Scaramucci's short-lived tenure, which ended following a profanity-laden interview with a reporter from The New Yorker, made Epshteyn look less than prescient.

Amid criticism of the must-run policy, Scott Livingston, Sinclair's vice president of news, sent out an internal memo July 16 to news directors at all of the chain's stations, defending the practice. The memo was published online and later verified by Sinclair.

"As Sinclair has continued to have success and has grown across the country, we have come under fire from a range of competitors and other opponents who seek to damage our reputation for their own purposes," Livingston wrote.

Livingston said Sinclair's must-run content, the majority of which is "noncommentary" straight news from its Washington bureau, equals less than 1 hour per week. He said the commentary segments are "clearly identified" and constitute a "tiny percentage" of the stations' weekly broadcast content.

Karl Frisch, executive director of Allied Progress, a Washington, D.C.-based progressive advocacy organization, said the conservative bent of Sinclair extends beyond its must-run segments, with pressure exerted over the manner in which local stories are covered.

"For a lot of issues, anchors and reporters and producers will hear from the national headquarters on big national stories and they will be told this is how it's going to be reported," Frisch said. "Over time, these reporters just get beaten into compliance because it happens so frequently."

Analysts believe Sinclair will employ the same strategy at Tribune stations — including cost-cutting and conservative editorializing — that has played well in smaller markets.

"In an acquisition like Tribune, they've got some larger markets to contend with, but I don't necessarily think their playbook is going to be any different," said Tuna Amobi, an equity analyst with investment research firm CFRA in New York.

For Chicagoans of a certain age, WGN-Ch. 9, which hit the airwaves in 1948 from Tribune Tower, was the go-to station for homegrown children's programming, with classics such as "Ray Rayner and His Friends," "Garfield Goose and Friends" and "Bozo's Circus."

These days, WGN is perhaps best known for broadcasting 70½ hours of local news each week, more than any other Chicago TV station. That includes a six-hour daily block with its highly rated, sometimes irreverent weekday morning news program.

If Sinclair acquires the station, said Carusone, of Media Matters, viewers may not notice changes immediately, but over time they'll see "non sequitur" news stories that are a "reflection of Sinclair's national agenda" inserted into WGN's local newscasts.

They may also see some new faces delivering the news.

"There's a very good likelihood of ... turnover in the near future," Carusone said. "It's not just that they will be fired. Some of them will just leave because they don't want to deal with" Sinclair's brand of local news.

Steven Marks, executive vice president and COO of Sinclair's television group, said during an Aug. 2 earnings call that despite the negative press, Sinclair is good at local news.

"With all the news you've been hearing, the bottom line is people watch us in droves," Marks said. "We're on top of our game, and the biggest part of what we do is local news. We're the best at it."

Meanwhile, the proposed deal sparked speculation that Sinclair might convert cable channel WGN America, which now reaches 80 million pay-TV homes, into a conservative news network to rival Fox News Channel.

Sinclair CEO Chris Ripley put that speculation to rest in a recent interview with Variety. A Sinclair spokeswoman confirmed that the process of reworking cable and satellite carriage agreements for the format change was "pretty impossible."

Under Sinclair ownership, however, changes would be in store for WGN America, which started as a superstation in the 1970s by uploading WGN's programming to satellite, beaming Cubs games, local newscasts and reruns of "The Andy Griffith Show" to distant cable providers.

Converting it to a full-fledged cable channel was a high priority for Tribune Media after the company emerged from bankruptcy at the end of 2012 under former CEO Peter Liguori.

WGN America rolled out a number of high-profile original programs and dropped Cubs baseball in a bid to become the next FX or AMC. Sinclair's Ripley has already made clear that the cable channel would scale back original programming to reposition it for profitable growth if his company acquires Tribune.

The deal also would add WGN-AM 720 — launched by Chicago Tribune publisher Col. Robert McCormick in March 1924 with call letters standing for "World's Greatest Newspaper" — to four Seattle radio stations already under Sinclair's ownership.

WGN, which dubbed itself the "Voice of Chicago," has been a news-talk staple throughout its history, with the likes of Bob Collins, Wally Phillips and Roy Leonard enshrined in its "Walk of Fame" outside its studios at Tribune Tower on North Michigan Avenue.

It is unclear how programming might evolve under Sinclair. The closest format to WGN is conservative Seattle talk radio station KVI-AM, which features a mix of local and syndicated hosts, including Sean Hannity.

"There's a reason why WGN Radio is not the home of Sean Hannity and Rush Limbaugh in Chicago," said Carusone, of Media Matters. "WGN has always been a balanced local radio station."

Despite the concerns about what Sinclair ownership would mean for Tribune's stations, the acquisition is far from a done deal.

Sinclair is banking on a more favorable regulatory environment under the Trump administration to close the Tribune deal. The FCC voted in April to reinstate the so-called UHF discount, a technologically obsolete rule that helps the combined Sinclair-Tribune entity get under an ownership cap limiting coverage to 39 percent of the TV households nationwide.

Media watchdog group Free Press challenged the FCC's decision, but on June 15 a federal appeals court in Washington, D.C., denied an emergency motion for a stay on implementing the UHF discount. The appeal is ongoing, but Sinclair has since filed its application with the FCC, which on July 6 started its 180-day clock for completing the transaction.

"From our perspective, the important thing was the stay being lifted," Sinclair CEO Ripley said during the Aug. 2 earnings call.

The proposed transaction exceeds the FCC ownership limit by 6.5 percent, even with the UHF discount, but Sinclair executives are hoping to avoid selling any of the stations in the combined group.

Sinclair argues that scale helps station groups compete for advertising dollars and increasingly important retransmission fees — the amount cable and satellite companies pay to carry local TV stations.

Tribune Media reported Wednesday that television revenues were down 2 percent through the first six months of 2017, citing "softness" in core advertising, partially offset by gains in retransmission revenue.

Tribune Media CEO Peter Kern said in a news release that the company remains on track to close the transaction with Sinclair.

However, in addition to earning FCC approval, the transaction has to pass muster with the Justice Department's antitrust division, which issued a second request Aug. 2 for additional information, signaling some concerns and potentially extending the process.

"It's a sign that at least some divestiture will be required to satisfy antitrust concerns," said Dan Birk, an attorney at Chicago-based Eimer Stahl whose practice focuses on antitrust litigation.

Julian Sinclair Smith brought his four sons into the family-run business and built Sinclair from a modest, mostly small- and medium-market chain, into a broadcasting behemoth. David Smith became president and CEO in 1991, and the company went public with 13 TV stations in 1995, ushering in rapid growth.

In 2009, Sinclair was on the brink of bankruptcy, burdened by about $1.3 billion in debt, with $500 million in notes coming due. Sinclair was able to renegotiate the debt and began a buying spree in 2011, acquiring $3 billion in assets over several years and amassing the largest TV station chain in the country.

With Tribune Tower already sold for redevelopment and the corporate headquarters likely headed to the Baltimore suburb where Sinclair has built a TV station empire, any impact from the merger will be amplified in Chicago, the center of Tribune's broadcasting universe.

The beginning of the end came in December 2008, when unlike Sinclair, Tribune filed for Chapter 11 bankruptcy protection during the Great Recession, emerging four years later owned by senior creditors on a mission to monetize its assets.

In 2014, Tribune Media spun off its publishing division, which is now known as Tronc and includes the Chicago Tribune, Los Angeles Times and seven other major daily newspapers, retaining broadcast, real estate and other assets.

What Sinclair does with Tribune's rich broadcasting legacy remains to be seen.

rchannick@chicagotribune.com

Twitter @RobertChannick

Copyright © 2017, CT Now
12°