Conservative commentator Armstrong Williams, the longtime confidant of Trump Cabinet member Ben Carson, is set to get what he called “a good deal” — three local television stations from Sinclair Broadcasting Group for just a fraction of the market price.

Williams is acquiring the three stations — in Seattle, Salt Lake City and Oklahoma City — for $4.95 million. That’s some $45 million to $55 million less than what Justin Nielson, a senior research analyst who tracks the broadcast sector for the data and research firm Kagan, said he would have expected.


And while Sinclair is shedding stations in hopes of improving its chances of obtaining approval for its mega-purchase of Tribune Media, the company’s recent moves to offer favorable deals to friendly buyers is raising further questions about how much control Sinclair is truly planning to cede, and whether the company is trying to skirt federal rules.

“I know I got a good deal,” said Williams, who is a longtime friend of Sinclair Executive Chairman David Smith. “That's what happens when you’ve had a partnership and a relationship for 25 years. Sometimes you get a break; sometimes you get prices that nobody else can get. That’s the way business works.”

He added, “I’m a tremendous negotiator. I’m like Donald Trump; I know how to negotiate.”

In each of the cities where Williams bought a TV station, Sinclair made the decision to sell in order to satisfy rules prohibiting one company from owning multiple major stations in a single market, subject to a case-by-case review by federal regulators. Concerns about one company’s ownership of two stations in the same market have been magnified by Sinclair’s policy of forcing its stations to run conservative commentary.

But selling to an outspoken conservative buyer with close ties to the company would defeat the purpose of the rules, according to critics of the Sinclair-Tribune merger.

In fact, Williams’ deal is not a traditional station sale, but a so-called sidecar arrangement, which will transfer the three stations’ broadcast licenses — the Seattle station is a Univision affiliate, the Salt Lake one is MYTV, and the Oklahoma station is independent — to his company but still leave Sinclair heavily involved.

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If the deal is approved by the Federal Communications Commission, Sinclair will receive 30 percent of monthly net sales revenue for the stations, in exchange for running advertising and sales for them, maintaining their studios and websites, and offering programming, including the controversial conservative commentary Sinclair requires its own stations to air. For his part, Williams insists he has the right not to air any segments or programming he does not approve of.

“I own my stations, I do whatever I want to do. It has nothing to do with Sinclair,” Williams said.

Sinclair did not respond to a request for comment.

Though the FCC has approved these types of sidecar deals in the past, critics have panned them as blatant workarounds for rules designed to keep any single broadcaster from exerting too much influence. By maintaining de facto control of the sidecar stations, Sinclair will be able to further spread its conservative message, said Gene Kimmelman, president and CEO of Public Knowledge, a policy group that opposes the deal.

“The more stations any one company owns, the more likely consumers will receive reduced diversity of viewpoints, especially from a company like Sinclair that dictates a specific political message,” he said.

Such a “cozy or sweetheart” deal, Kimmelman added, “should really send up an alarm to law enforcers that this is not a real meaningful divestiture of assets.”

Chris Ruddy, the CEO of NewsMax, a right-leaning media company that opposes the deal, agrees.

“The Sinclair plan is loaded with sham deals that are not real divestitures,” Ruddy said. “It will be an insult to the public interest if the FCC approves this merger and will undermine the public’s confidence in the commission.”

As the FCC opens up for comments on the merger next week, John Simpson, a consultant on government relations for Ruddy and NewsMax, said he expects station sale prices to be a prime area of attack.

“I think it is one of the major issues,” Simpson said, pointing to a 2001 case in which the FCC shot down a set of sidecar deals between Sinclair and Cunningham Broadcasting Corp. (then called Glencairn), citing, in part, sales prices that were too low. Regulators ruled that such low prices indicated that the deals were not legitimate, “arms-length” transactions.

“The cheapo deals are what actually may be their undoing,” Simpson said.

Ross Lieberman, senior vice president of government affairs for the American Cable Association, which also opposes the deal, said his group will also be targeting the sales prices, among other issues with the sidecar arrangements. “These are all really ripe issues,” he said.

Williams, who already owns seven television stations, including two with sidecar arrangements with Sinclair from previous sales, responded that anybody buying anything is going to try to get the best deal.

“Whether you bought a house, whether you’re buying a car, are you kidding me, that’s America. If I can get a good deal based on the history of my relationship, God bless America,” he said.

In addition to Williams’ stations, Sinclair has proposed sidecar arrangements with two other entities, aimed at satisfying FCC rules capping how many viewers one broadcaster can reach nationally. Cunningham, a company with close ties to the Smith family, would buy CW stations in Houston and Dallas for a combined $60 million. And Steven Fader, a business associate of Smith’s, would purchase WGN in Chicago for $60 million, with an option for Sinclair to buy it back in eight years. Both of those deals contain conditions like the one with Williams.

The Cunningham deal, according to Nielson, the Kagan analyst who specializes in local media, could have left as much as $40 million on the table, though he said that would be on the high end. He thought the WGN deal, however, was roughly in the ballpark.

There can be significant variations in how experts appraise local television stations, and the many conditions baked into sidecar arrangements make valuations even more difficult. Lawrence Patrick, managing partner of Patrick Communications, a media firm based in Maryland that brokers station sales, said he would have expected Williams’ deal to cost $10 million to $15 million more than it did, a lower estimate than Nielson. He judged the Cunningham deals as relatively fair but the WGN one as “very low.”

With a brand like WGN in the nation’s third-biggest media market, he said, he would have expected “a minimum $100 million or more, more like $150 million.”

Whatever the variation in individual appraisals, Patrick said, there is wide agreement that Sinclair’s sidecar buyers received favorable prices. “To a lot of people, the numbers do in fact look pretty low,” he said.

Neither Cunningham nor Fader responded to requests for comment.

Nielson said there are multiple reasons for Sinclair to want to keep the sidecar stations close at hand. First, it will allow the company to reach more viewers with its message. Second, the scale will help it on the national ad market and give it increased leverage in negotiating the fees that cable companies pay to carry their stations, as well as the fees Sinclair pays networks for their affiliations. The terms of the sidecar arrangements are also financially favorable to Sinclair.

Patrick added that the FCC looks favorably on minority ownership, and selling three stations to Williams, who is black, could endear Sinclair to the regulators.

In the past, Sinclair has been so eager to see sidecar deals go through that it has guaranteed the debt of its buyers. Williams said, though, that was not the case on the three stations he is set to buy, saying that he has secured loans from JPMorgan Chase.

Earlier this year, Sinclair proposed a previous slate of station sales, which, in addition to WGN, included a sidecar deal for a prime station in New York. But the company revised its proposal in April, apparently in response to FCC pushback. Of the 23 stations Sinclair is now proposing to sell, 17 are to independent buyers, including Fox, which struck a $910 million deal for seven stations.

The FCC comment period, which includes time for Sinclair to reply, will run through mid-July. The company is betting that its revised slate of sidecars will be enough to slide by regulators.

“It really comes down to Sinclair trying to gain scale and trying to do it in the most efficient manner,” Nielson said. “They really didn’t want to give up any of these assets, honestly.”

