Nightly, the local Fox affiliate churns out stories on teen carjackings, students who can’t read, and smashed car windows outside police headquarters, all fodder for an ongoing series with titles like “City in Crisis,” and “Project Baltimore.” The reporting demands transparency from a government often portrayed as hesitant to oblige. It has also been showered with awards and acclaim for its hard-nosed approach to municipal accountability reporting.

However, there is one aspect of the city government’s alleged penchant for secrecy and dysfunction that the station has generally avoided: the lucrative partnership between the owners of Fox 45, their immediate family members, and City Hall, a partnership made manifest in the generous tax breaks afforded to the glitzy downtown development called Harbor East.

As we previously reported, Harbor East is a taxpayer-bolstered urban oasis: a 20-acre upscale entertainment district that has benefited from tens of millions of dollars in tax breaks, subsidies, and infrastructure spending by city taxpayers. The full price tag has remained secret—until now.

Even more opaque is the role that the beneficiaries of this communal largesse play in Baltimore’s media ecosystem—a connection that starts with two of Baltimore’s most powerful families, whose interests in both Fox 45 and Harbor East are intertwined through real estate holdings, restaurants, and other businesses financed, in part, by City Hall.

The nexus of this overlapping relationship is the aforementioned high-rise development astride Baltimore’s gleaming Inner Harbor. It’s there, along those cobblestone streets, that the Paterakis family, renowned for their sprawling Fells Point bakery, and the Smiths, who control Sinclair, have collectively invested heavily in one of Baltimore’s swankiest neighborhoods. And it’s an investment that has benefited from a breathtaking array of tax credits and subsidies.

Harbor East was the brainchild of John Paterakis Sr., the successful entrepreneur who actually built the baking business from a single row home into an expansive industrial food giant. In 1990, he brokered a deal with the city that laid out an ambitious plan to turn a dusty parking lot into a waterfront palisade.

Paterakis’ daughter, Vanessa Paterakis Smith, is married to Frederick Smith, one of four Smith brothers, who collectively own the vast majority of Sinclair Class B stock and, thus, control the local broadcasting giant. The 1990 agreement lists her as one of the beneficiaries of the eventual buildout, which specifically names “the children and grandchildren” of John Paterakis as parties to the initial deal. 

But the ties don’t end there.

The Atlas Group, the restaurant juggernaut owned by John Paterakis Sr.’s grandson Alex Smith, operates roughly 10 locations within the boundaries of Harbor East. Among them are four eateries in the ritzy Four Seasons Hotel, which, incidentally, received $10.8 million in tax breaks from a Brownfields remediation program.

The ties formed and benefits accrued through the Harbor East development, for the most part, remain hidden from Fox 45 viewers.

In fact, a recent front-page story in the Baltimore Sun hyping the grand opening of yet another Atlas-run Harbor East restaurant, The Ruxton, revealed that Sinclair’s chairman, David Smith, is an investor in Atlas. David Smith is also the new owner of the Baltimore Sun, which he purchased in February from the private equity firm Alden Capital for an undisclosed sum.

All of this, ironically, makes the story of Harbor East a prime candidate for Fox 45’s accountability reporting: a wealthy developer and his family benefiting from lucrative deals with the Baltimore government to build a shiny city on the harbor without requisite transparency. Nevertheless, the ties formed and benefits accrued through the Harbor East development, for the most part, remain hidden from Fox 45 viewers.

 It’s an oversight some media ethicists say runs afoul of the requirements that journalists must disclose material conflicts with the subject—in this case, the city—they cover.  

“The station owes its audience some transparency about its business conflicts of interest,” Kelly McBride, the chair of the Craig Newmark Center for Ethics and Leadership at the Poynter Institute, told TRNN.

“And clearly, when the story is directly related to a conflict, disclosure is in order.”

A taxpayer-bolstered paradise

As our investigation of Harbor East uncovered, the 20-acre site, home to a dazzling entertainment district, relies heavily on tax breaks to operate. Between 2012 and 2022, the development was granted roughly $115 million in direct tax abatements, making it one of the most-subsidized developments in the city.

Yet that number covers just a decade of incentives that, in some cases, were already in effect in the early 2000s. It also excludes many other less direct forms of assistance outlined in the 1990 agreement between the developers of Harbor East and the city.

Between 2012 and 2022, the [Harbor East] development was granted roughly $115 million in direct tax abatements, making it one of the most-subsidized developments in the city.

That agreement reveals that the buildout of the waterfront included a variety of additional contributions from the city; namely, a marina, bulkheads, and an interest-free mortgage to finance the purchase of land the city owned before Paterakis made the deal. 

The subsidies have paid off handsomely. In 2022, the Marriott Waterfront Hotel was sold for roughly $130 million by an LLC controlled by the Paterakis family. The hotel was the beneficiary of a 25-year payment in lieu of taxes (PILOT) agreement, which abated $57 million in taxes. In 2018, the family sold the former Legg Mason building for $300 million. That property also garnered tens of millions in tax breaks in a lucrative deal the city has refused to release the details of, with the courts rebuffing a lawsuit from the nonprofit Abell Foundation seeking information about how the original development was financed. 

We reached out to Sinclair for comment to ask why this information had not been disclosed to viewers of Fox 45. Spokesperson Jessica Bellucci denied any relationship between the ownership of Sinclair and Harbor East. She also accused TRNN and myself of bias. 

“In your past coverage of Sinclair, you have referred to the company as “Right-wing,” “Absolutely right-wing,” and “Extremist right-wing,” and Real News Network has recently called David “a right-wing demagogue.”

“With this type of bias, I’m not confident Sinclair will be covered fairly and accurately by your organization,” wrote Bellucci.

“Harbor East is owned and controlled by Paterakis Family. Sinclair owns 0% and has no involvement in that development,” she added. 

“I would hope, in the interest of journalism, similar inquiries by Real News Network regarding tax interest disclosures will be asked of every media company that you cover, and this is not a new line of inquiry specific to WBFF simply because you have an unfavorable opinion of its parent company. I would also hope in your reporting, you do disclose your past ties to the station.”

“Furthermore, as you are well aware, the city of Baltimore has not had a Republican mayor in more than 75 years, every City Council President in history has been a Democrat and all 15 members of the current City Council are also Democrats. So, if any companies are receiving a tax break in Baltimore, that tax break was put into place by Democrats.”

Full disclosure:  I worked as an investigative producer for Fox from 2011 to 2015, a fact I address in more detail below. 

However, the central question as to what Sinclair should reveal about ownership’s ties to Harbor East is simply a matter of transparency: what are the obligations of a media enterprise when its journalism and business interests intersect?  

McBride said the myriad of ties between Sinclair’s ownership and the very city government and development properties Smith-owned outlets are reporting on warrants a fulsome disclosure strategy. Among her recommendations is the full accounting of the material relationships that might affect Sinclair’s coverage of the city.  

“The first line of defense is to be transparent that the conflict exists,” McBride told TRNN. “This safeguard includes adding information to the organization’s website, for example, detailing the material conflict and letting viewers know what management is doing to wall off the prospects that it could impact coverage.” 

McBride expressed concern that material conflicts are not the only problem for Sinclair—she also said perception must be addressed. 

 The central question as to what Sinclair should reveal about ownership’s ties to Harbor East is simply a matter of transparency: what are the obligations of a media enterprise when its journalism and business interests intersect?

“If the conflict is revealed to an average new consumer and they perceive that may have influenced a story, you want to be transparent about that as well,” she added. 

“Because perception becomes reality.”

From that perspective, Sinclair’s obligation to reveal its business relationship with the city seems fairly straightforward. The problem isn’t that the owners of media companies also own property in the municipalities they cover, nor is the problem that there are tax incentives for owners and media companies like these to take advantage of—The Real News Network itself, as stated on our website, is a nonprofit media organization, a 501(c)(3) entity, which means it is tax exempt. It is because of the special and exceptional benefits the firm’s owners have been granted by the city Fox 45 reports on.

These conflicts have real-world implications.

Consider a story posted on Fox 45’s website in February, titled “Waste Watch: Why Harborplace Will Put Taxpayer Dollars On The Line,” which focused on the proposed use of public money to fund the overhaul of the city’s iconic and aging waterfront pavilions. The plan calls for tearing down the existing infrastructure and replacing it with residential apartments. To fund it, the developer is asking for $400 million in public subsidies.

In the piece, David Williams—president of the Taxpayers Protection Alliance, a DC-based nonprofit—questions the use of taxpayer dollars to pay for the overhaul. He also cites other projects like the troubled Port Covington development, which received generous tax breaks as well, as a warning to city residents that subsidies don’t always deliver.

“There are a lot of promises going on here, and this could be very, very expensive for taxpayers,” Williams argues passionately. 

But neither the segment itself nor the anchor interviewing him discloses the ties between Sinclair’s ownership and Harbor East.  It’s a troubling oversight, especially considering the fact that the development—which, again, the station’s owners’ families also own—has plenty of residential units, restaurants, and attractions a stone’s throw away that would be in direct competition to the new renovation of Harborplace. They also do not disclose that Harbor East is a taxpayer-subsidized development as well, which would be worth noting if the station is going to run an interview highly critical of tax subsidies in general.  

A perplexing diet of negative news

Still, even though the appearance of conflict is frequent enough to raise questions, Fox 45’s approach to coverage of Baltimore doesn’t neatly fit with one’s expectations of a journalism entity compromised by ownership interests. Sinclair would seemingly have every incentive to portray Baltimore positively—it would certainly make more people want to live in and visit the city where the Smith and Paterakis families own major waterfront developments—yet they emphatically don’t.

This apparent dissonance becomes even more pronounced if you spend time within the area of Harbor East itself.

Last month, I attended a journalism conference sponsored by Investigative Reporters and Editors held at the Marriott Waterfront Hotel. Each day of that conference, roughly a thousand journalists learned about the latest techniques to obtain and analyze data. Then, they would spread out across the neighborhood seeking food and entertainment options. Sidling between stores like Chanel and Abercrombie & Fitch, and walking along the expansive, well-appointed marina, it becomes pretty obvious pretty quickly that the waterfront entertainment district relies heavily upon tourism. Watching the crowds venturing through Harbor East, Fox 45’s city-in-crisis mantra didn’t make sense.

Setting aside for a moment the possibility that the constant drumbeat of crime reporting is just a way to ensure police are paying attention, there might be another, less obvious explanation for Fox 45’s focus on mayhem. Circumstances particular to Baltimore have made it easy pickings for businesses and politicians astute enough to exploit it. The “failed city” narrative is not illogical if you understand the system that has made generous tax subsidies for developments like Harbor East a centerpiece of the city’s growth strategy.

A city designed to fail

First, it’s essential to understand the uniquely perilous dilemma Baltimore faces as it tries to staunch the outflow of residents and attract investment. As our investigative documentary Tax Broke details, Baltimore is one of only two so-called independent municipal entities—the other being St. Louis—with a population of over 500,000. This means that neither city is integrated into the county that surrounds them.  

As a result, both cities suffer from similar ills, such as lost population, a shrinking tax base, and concentrated poverty. Unfortunately, Baltimore’s inability to expand or grow its revenue base has led to an even more debilitating predicament: a property tax rate roughly twice that of the surrounding counties. Legendary urban planner David Rusk understood the broader implications of this isolation decades ago. As he noted in his 1995 book Baltimore Unbound, cities that cannot expand are doomed to fail.

Nevertheless, as Harbor East demonstrates, failure can be quite profitable if you know how to take advantage of it.

That’s because Baltimore’s constraints have forced the city to be particularly aggressive to attract development. This means almost all of the new construction that has occurred over the past two decades has been in some form or fashion tied to tax incentives. The consequence is a thoroughly balkanized tax system that favors developers over residents and small business owners, which is perhaps why, despite the cluster of construction cranes visible downtown, the city’s population has continued to shrink.

Where this fits in with Sinclair’s aggressive approach to covering the city is simple: a failed city is a vulnerable city. A city that is, at its core, dysfunctional certainly can’t demand fair and equitable development.

I was part of the problem

I, too, was part of the problem, a fact that the Sinclair spokesperson invited me to explore. So here goes.

I worked as an investigative producer at Fox 45 from 2011 to 2015. The station is where I got my start on the whole topic of development-driven tax breaks. In 2012, I co-produced a series of investigative reports on the planned Harbor Point development and the accompanying $106 million TIF (tax increment financing) the city had approved to fund it. The reporting was fair and thorough, and it even earned a Capital Emmy Award for best investigative series.

Hammering away at government malfeasance while benefiting from ties to that same government may be good for business, but is it good for journalism?

At the time, I was completely unaware of Sinclair ownership’s interest in Harbor East, which is directly adjacent to Harbor Point. The conflict should have been disclosed, because Harbor Point would be—and is—a direct competitor to Harbor East. But we didn’t, which was my fault. Ignorance is no excuse. 

Still, what I always found curious about working for Sinclair was that management’s public preference for unfettered capitalism never stopped them from accepting government subsidies. Maybe that’s just good business, although, at times, it felt hypocritical.

That point was driven home for me when Sinclair worked with a consortium of local broadcasters to lobby the government to buy back spectrum that had been given to them by the federal government. 

Spectrum is another type of real estate, just of the digital variety. It conveys all sorts of information, from radio broadcasts to cell phone signals, and is vital to a plethora of telecommunications industries. The government had regulated it for years, awarding spectrum to local broadcasters with the understanding that the limited supply meant it was essentially a public good.  

Decades later, that same government decided to take it back due to a so-called “spectrum crunch.” Companies like Verizon and AT&T, eager to add more cell phone customers and improve download speeds, needed more spectrum to expand.  

What should have been a reasonable plan to return what had essentially been gifted to broadcasters like Sinclair instead became a push for compensation. 

Broadcasters lobbied the government to pay them in exchange for returning the bandwidth. I recall on one occasion being sent to Washington, DC, to do an interview with the National Association of Broadcasters, who were pushing for this plan, specifically. I thought it was suspect at the time, given my employer’s material interest in the outcome. 

According to Adweek, the auction ultimately netted Sinclair $313 million; a very nice payout in exchange for a public good that was given to them for free, a fact that was never acknowledged in my story or any other coverage of the topic I recall. 

The point is that while Sinclair has benefited from public largesse, it never acknowledges the benefits publicly, which makes the Harbor East non-disclosure issue part of a troubling pattern. Hammering away at government malfeasance while benefiting from ties to that same government may be good for business, but is it good for journalism?

The tightening grip of Sinclair’s power 

The obligation of Sinclair’s ownership to disclose a material relationship aside, the people I worked with during my tenure at Fox 45 were outstanding journalists, and we did do important work together. They cared, worked hard, and produced excellent work under what were often difficult circumstances. I still cherish my time there and admire my former colleagues. Truthfully, it was Sinclair that rescued my career after the Baltimore Examiner, a short-lived newspaper, closed—so, for that, I am grateful.

The people I worked with during my tenure at Fox 45 were outstanding journalists. They cared, worked hard, and produced excellent work under what were often difficult circumstances. I still cherish my time there and admire my former colleagues.

That said, it’s clear that Sinclair has to do some work to build public confidence. Recently, the local activist group Leaders of a Beautiful Struggle held a town hall at the Reginald Lewis Museum to discuss Sinclair’s coverage of Baltimore.

The topic was Sinclair’s constant drumbeat of crime reporting, which a variety of speakers deemed, if not racially tinged, to be at the very least imbalanced.

Dayvon Love, policy director for LBS, argued that the station’s disproportionate focus on crime created a misrepresentation of African-American youth—a critique echoed by a panel that included State Senator Jill Carter, whom the station has often targeted for her work on juvenile justice reform. 

Recently, some of this mistrust boiled over when current Baltimore Mayor Brandon Scott refused to participate in a debate with challenger and former Mayor Sheila Dixon, which was to air on Fox 45. 

Scott cited the station’s perceived lack of impartiality as his reason for declining.  

“Fox 45 WBFF have showcased themselves to be entirely incapable of being impartial and ethical in their approach,” he said.

Fortunately, Baltimore’s media market does not lack alternatives to Fox 45.

Scott proposed a list of neutral moderators who would have editorial autonomy. Fox 45 rejected the offer. 

All of these questions of media ethics are even more important due to the most recent addition to Smith’s media portfolio: the Baltimore Sun. Smith’s acquisition of the paper of record expands his media footprint in Baltimore and, with it, his influence. What will happen to the city that seems increasingly subject to the whims of a single, ever-more powerful family?

Fortunately, Baltimore’s media market does not lack alternatives to Fox 45. 

The Baltimore Banner does excellent work and is independently funded. Baltimore Beat is an independent newspaper distributed free to the community with a focus on the arts and culture of Baltimore City residents. Baltimore Brew has built a solid reputation for exacting accountability reporting of city governance. And, of course, the Afro-American Newspaper, for which I occasionally write, provides robust local reporting with a historical context that can only come from being the longest longest-running Black-owned newspaper in America. 

However, all these entities are either nonprofit organizations or small in scale, and none have the combined power of being the paper of record aligned with a national broadcast network. It wouldn’t be unreasonable to conclude that Sinclair and its affiliates will continue to portray Baltimore as a “city in crisis,” even if purveyors of that message are both part of the problem and the beneficiaries of its supposed failures.

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