The Department of Justice (DoJ) has sent letters to some television broadcast groups discussing plans to investigate operational agreements commonly known as “sidecars”, said five sources familiar with the matter.
Some broadcasters have already received civil investigative demands (CIDs), according to three of the sources. The names of specific broadcasters that have been contacted by the DoJ could not be learned, but the group of broadcasters who have received CIDs is smaller than the group that received the initial notices, the first source said.
Large broadcasters often have sidecar agreements with companies that exist only to run sidecar stations. For instance, Nexstar Media Group [NASDAQ:NXST] has sidecar agreements with Mission Broadcasting; Sinclair Broadcast Group [NASDAQ:SBGI] has agreements with Cunningham Broadcasting; and Gray Television [NYSE:GTN], following its acquisition of Raycom Media, has agreements with American Spirit Media.
Sidecars are agreements that see one broadcaster take over some part of the operations of a station run by another company. More often referred to as joint sales agreements (JSAs), shared services agreements (SSAs) or local marketing agreements (LMAs), these contracts have come under fire from regulators and public interest groups in the past, who have claimed that they effectively allow stations to exceed restrictions on ownership concentration.
by Jonathan Guilford in New York, Joseph Tipograph and Rebecca Shore in Washington, DC, and David B. Wilkerson in Chicago