F.C.C. Watchdog Looks Into Changes That Benefited Sinclair

WASHINGTON — Last April, the chairman of the Federal Communications Commission, Ajit Pai, led the charge for his agency to approve rules allowing television broadcasters to greatly increase the number of stations they own. A few weeks later, Sinclair Broadcasting announced a blockbuster $3.9 billion deal to buy Tribune Media — a deal those new rules made possible.

By the end of the year, in a previously undisclosed move, the top internal watchdog for the F.C.C. opened an investigation into whether Mr. Pai and his aides had improperly pushed for the rule changes and whether they had timed them to benefit Sinclair, according to Representative Frank Pallone of New Jersey and two congressional aides.

“For months I have been trying to get to the bottom of the allegations about Chairman Pai’s relationship with Sinclair Broadcasting,” Mr. Pallone, the top Democrat on the committee that oversees the F.C.C., said in the statement to The New York Times. “I am grateful to the F.C.C.’s inspector general that he has decided to take up this important investigation.”

It was unclear the extent of the inspector general’s investigation or when it might conclude, but the inquiry puts a spotlight on Mr. Pai’s decisions and whether there had been coordination with the company. It may also force him to answer questions that he has so far avoided addressing in public.

The inquiry could also add ammunition to arguments against the Sinclair-Tribune deal. Public interest groups and Democratic lawmakers, including Mr. Pallone, are strongly opposed to the deal, arguing that it would reduce the number of voices in media and diminish coverage of local news.

Sinclair’s chief executive, Chris Ripley, has called Mr. Pai’s relaxation of media ownership rules a “landmark” development for his company and the industry. A union of Sinclair and Tribune would create the nation’s biggest television broadcaster, reaching seven out of 10 American homes. The F.C.C. and Justice Department are widely expected to approve the merger in the coming weeks.

The office of F.C.C. inspector general, which is a nonpartisan role that reports to the agency and regularly updates Congress on some investigations, said it would “not comment on the existence or the nonexistence of an investigation.”

Mr. Pai’s office and Sinclair declined to comment. When the legislators called for an investigation in November, a spokesman for the F.C.C., representing Mr. Pai, said the allegations of favoritism were “baseless.”

“For many years, Chairman Pai has called on the F.C.C. to update its media ownership regulations,” the F.C.C. spokesman said. “The chairman is sticking to his long-held views, and given the strong case for modernizing these rules, it’s not surprising that those who disagree with him would prefer to do whatever they can to distract from the merits of his proposals.”

A New York Times investigation published in August found that Mr. Pai and his staff members had met and corresponded with Sinclair executives several times. One meeting, with Sinclair’s executive chairman, took place days before Mr. Pai, who was appointed by President Trump, took over as F.C.C. chairman.

Sinclair’s top lobbyist, a former F.C.C. official, also communicated frequently with former agency colleagues and pushed for the relaxation of media ownership rules. And language the lobbyist used about loosening rules has tracked closely to analysis and language used by Mr. Pai in speeches favoring such changes.

In November, several Democrats in Congress, including Mr. Pallone, called on the inspector general’s office to explore all communications — including personal emails, social media accounts, text messages and phone calls — between Sinclair and Mr. Pai and his staff.

The lawmakers also asked for communications between Mr. Pai’s office and the White House. They pointed to a report in March 2017 from The New York Post, in which Mr. Trump is said to have met with Sinclair’s executive chairman, David Smith, and discussed F.C.C. rules.

Some members of Congress have asked Mr. Pai for such communications, but he has not responded.

The F.C.C. inspector general, David L. Hunt, and other officials in his office met with aides in the House and Senate, including those for Mr. Pallone, in December. The F.C.C. officials told the aides that they would open an investigation, according to four people with knowledge of the meetings.

In later conversations, F.C.C. officials said that an investigation was underway, according to two other aides.

The aides, all of whom work for Democratic lawmakers, would speak only on the condition of anonymity because the investigation is private.

The investigation could put the F.C.C. inspector general’s office in a high-profile situation.

Mr. Hunt was promoted to lead the office in 2011 by Julius Genachowski, a Democrat and the F.C.C.’s then-chairman, after working in the agency for about five years. The office investigates potential violations of civil and criminal laws by agency staff members and companies that receive money from the agency. On Wednesday, the inspector general for veterans affairs, a similar position, released a scathing report about travel spending by the department’s secretary, David J. Shulkin.

The F.C.C.’s inspector general does not make public all of its investigations. But details of some investigations have been disclosed through Freedom of Information Act requests and through the office’s reports to Congress.

In 2015, the inspector general’s office looked into possible coordination between the Obama administration and the F.C.C. chairman at the time, Tom Wheeler, on the creation of so-called net neutrality rules. The rules prevented broadband providers from blocking or slowing traffic to consumers. The inspector general said its investigation could not find clear improper conduct.

Antitrust experts said this new investigation may complicate the reviews of the Sinclair-Tribune deal by the F.C.C. and the Justice Department. Even if the deal were approved, they said, any conclusions of improper conduct by Mr. Pai could give fuel to critics to challenge the review in courts.

“An investigation could cast a cloud over the whole process,” said Andrew Schwartzman, a senior fellow at Georgetown Law Center’s Institute for Public Representation. “For the review, knowledge of an investigation could generate caution and even delay completion of the deal.”

Content originally published on https://www.nytimes.com/2018/02/15/technology/fcc-sinclair-ajit-pai.html by CECILIA KANG