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Owner of Austin TV stations facing $13.4 million federal fine


Highlights

The FCC says several Sinclair stations were “engaging in repeated violations of the Communications Act of 1934.”

CBS Austin had more than two dozen “apparent violations,” FCC documents indicate.

A company that operates nearly 200 TV stations nationwide – including CBS Austin and Telemundo Austin in Central Texas – is facing a $13.4 million federal fine for allegedly airing sponsored stories that promoted a Utah cancer center in some of its news broadcasts.

Those stories, which records indicate Huntsman Cancer Foundation paid Sinclair Broadcast Group to run, in many cases lacked proper attributions letting viewers know they were sponsored content, according to the Federal Communications Commission.

The federal agency accuses several of Sinclair’s stations of “engaging in repeated violations of the Communications Act of 1934” by airing the unlabeled or mislabeled spots.

“Our action today advances the commission’s longstanding goals of protecting consumers by ensuring they know who is attempting to persuade them and protecting broadcasters and sponsors from unfair competitors that fail to abide by our disclosure rules,” the FCC said in its ruling.

CBS Austin had more than two dozen “apparent violations,” according to FCC documents, broadcasting Huntsman stories 28 times between Jan. 1, 2016, and July 22, 2016.

Outside of its newscasts, CBS Austin also allegedly aired a Huntsman infomercial on June 5, 2016, with “incomplete” identification of the program’s sponsor.

The fine being levied works out to $7,800 per broadcast with no attribution and $7,000 per broadcast with incomplete information, the FCC said.

Across Texas, Sinclair stations in Amarillo, Beaumont, El Paso, Harlingen and San Antonio also aired the Huntsman reports, which the broadcaster says focused on “cancer prevention, treatments and cures,” on multiple occasions, according to FCC records.

“Our rules require a broadcaster airing a paid program to include an announcement stating that the program has been paid to air and identifying the program sponsor,” the FCC said in its ruling. “After receiving an anonymous complaint… the commission’s Enforcement Bureau… gathered evidence that revealed that Sinclair apparently was paid to broadcast sponsored programming, including programming in the form of news segments that aired during the local news.

“Sinclair apparently broadcast such programming at 64 of its stations – collectively more than 1,400 times – without airing the required sponsorship identification announcements.”

The reports were produced at KUTV, the Sinclair-owned CBS affiliate in Salt Lake City, Utah, where the Huntsman Cancer Foundation is based, and transmitted to the other Sinclair stations to air, the FCC said.

Sinclair, in a written statement, said it plans to fight the fine, which is among the highest the agency has levied in recent years. The company said employees at its stations were given repeated instructions – orally and in writing – to use proper disclosures when airing Huntsman content.

“Any absence of sponsorship identification in these public service segments was unintended and a result of simple human error,” the company said, in part. “After working to reach a reasonable settlement, we are disappointed by this (notice of apparent liability), which we believe is unreasonable, given the circumstances of our case and the absence of any viewer harm. We disagree with the FCC’s action and intend to contest this unwarranted fine.”

The fine for Sinclair, which is in the midst of trying to acquire broadcast TV giant Tribune Broadcasting, was apparently the source of much debate within the FCC. In written statements, FCC commissioners were divided on the ruling.

“The proposed forfeiture of over $13 million is more than three times any penalty that has ever been imposed for violating our sponsorship identification rules,” FCC chairman Ajit Pai said. “Among other things, because of the seriousness of these violations, we have taken the base forfeiture amount for each and every apparent violation of our rules at issue here and adjusted it upward.”

Commissioner Mignon Clyburn, however, indicated she thought the penalty should be more severe.

“On first read, one might easily conclude (this) enforcement action by the Republican-led FCC represents a strong stand against a company with a history of skirting FCC rules,” she wrote. “But take a closer look: contrary to what the FCC majority would have you believe, the nearly $13.4 million fine levied against Sinclair Broadcast Group represents a mere slap on the wrist.

“Simply put, the ‘punishment does not fit the crime’ against a company that grossed more than $2.7 billion in revenue (in 2016). What we are talking about is an egregious violation of the commission’s rules by a company that knows better.”



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