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Execs explain TV swap, but some see it as blurry


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POSTED: Thursday, August 20, 2009

The impending swap of call letters and programming between KGMB-TV and KFVE-TV is described as a way to provide a seamless transition for viewers.

Skeptics, media watchdogs and at least one attorney versed in Federal Communications Commission regulations see a different picture.

The shared services agreement announced Tuesday between Alabama-based Raycom Media Inc. and Virginia-based MCG Capital Corp. will have both entities retain their broadcast licenses — the KHNL and KFVE licenses will stay with Raycom while KGMB's will remain with MCG.

However, FCC licenses are directly tied to a station's FCC registration number, facility identification number and frequency allocation, not call letters, said Dave Folsom, Raycom vice president.

While the call letter swap will involve some FCC oversight despite an automated call letter reservation system, approval will likely be granted without intervention since Raycom and MCG have agreed to the swap.

"The thought is to take CBS and NBC programming and place those on channels that currently Raycom has, and the University of Hawaii sports and other local programming would go onto what was KGMB, which will be KFVE," Folsom said.

The swaps "will keep CBS programming associated with the call letters KGMB and University of Hawaii sports associated with KFVE — that's the easiest way to view it. Don't worry about the underlying licenses, the viewers don't see the licenses anyway," Folsom said.

Also, channel numbers have lost their significance as technology changes have viewers tuning in to a station using different numbers via over-the-air digital converter boxes, cable boxes or satellite TV services.

Nevertheless, Raycom officials will ask Oceanic Time Warner Cable to realign channel assignments, Folsom said.

That will leave Raycom operating all three stations with control over, and deriving revenue from, NBC- and CBS-network affiliations in Honolulu.

MCG will give up its major network affiliation but will offer UH sports and other programming — a smaller revenue stream, but with no news operation to pay for, a less costly operation.

A single broadcast owner having two network affiliates in one market is not unprecedented, but it "is not commonplace," said Paul McTear, Raycom president and chief executive officer.

NBC "has fallen so far that in many markets they're either the fourth or fifth station. The network has lost about 30 percent of its prime-time ratings," he said.

Media Council Hawaii has characterized the arrangement as a thinly veiled attempt to circumvent FCC rules prohibiting joint ownership of two or more stations of the top four in a TV market, which KGMB and KHNL are.

FCC guidelines for different types of cooperative agreements between broadcasters in the same market limit the parties to control of no more than 15 percent of the air time and/or advertising time on another operator's station.

The Raycom/MCG agreement "certainly increases the likelihood that an FCC violation will be perceived to have occurred, and increases the possibility that the 'line' will be pushed and an actual violation will occur somewhere down the line in the future," said Dan J. Alpert, a Virginia-based attorney who represents several Hawaii stations.

Raycom and MCG will keep adverting sales separate, but will combine news staffers into one department that will provide newscasts for all three stations and some will be simulcast, McTear said.

"Both of our (legal) advisers differ from what (Alpert) suggests," McTear said.

Alpert described the agreement as "a very aggressive move" that "may result in questions by the FCC concerning whether an unauthorized transfer of control has occurred, and whether there is a violation of the FCC's multiple ownership limitations."

McTear was unswayed by Alpert's opinion.

"We remain pretty confident that we are not going to be in violation of or flirting with any violation of FCC rules," he said.