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TV stations' deal raises concerns


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POSTED: Thursday, August 20, 2009
                       
This story has been corrected. See below.

 

An easing of federal rules in recent years is likely to allow two major television network affiliates in Hawaii to function under the same ownership, a severe upheaval of the market's landscape. Alabama-based Raycom Media expects routine federal approval will allow the change to take place in 60 days, but the change deserves a closer look.

Raycom, which purchased NBC-affiliate KHNL and KFVE a decade ago, has announced what amounts to its acquisition of CBS-affiliate KGMB from Virginia-based MCG Capital Corp., which will be given KFVE, a relatively small operation that televises University of Hawaii sports. Paul H. McTear Jr., Raycom's chief executive officer, says the only change needing Federal Communications Commission approval will be the switch in monikers between KFVE and KGMB, the newly-named version of which will continue as the CBS affiliate.

The move comes at a time when the recession and a plunge in media advertising have created budget crises across the country. McTear said Raycom's Honolulu revenue this year is expected to be $48 million, down from $68 million in 2006.

Chris Conybeare, president of Media Council Hawaii, maintains that the placement of KHNL and KGMB under the same roof and the name switch are aimed at avoiding the need for the FCC's approval. Indeed, the maneuver has all the appearances of a shell game worthy of “;America's Got Talent.”;

The Honolulu movement is not the first of its kind. In 1998, the CBS affiliate and NBC affiliate in Wilkes-Barre, Pa., entered into a “;shared services agreement”; — the term used by McTear in describing the Honolulu plan — sharing facilities, engineering and staff, including the news staff, but with separate programming and sales departments. McTear pointed out that Sinclair Broadcasting has engaged in such shared systems on several occasions.

When it bought KHNL and KFVE, Raycom was the nation's first company to make use of a 1999 FCC decision allowing a single company to own two TV stations in the same market without needing a waiver. If both stations had been affiliates of Big Four networks, a waiver would have been necessary.

The rules have changed since then, but the commission maintains some limits on cross-ownerships, banning them in markets with three or fewer stations. It also eased the rules six years ago to allow one company to own two television stations in more markets, unless both are among the four highest-rated stations in the market.

The immediate effect of the deal will be the layoffs of about one-third of the employees of the stations' combined workforce of nearly 200. What are now four competing TV news staffs in the state will be reduced to three, a reduction in competition but possibly an improvement at what will become the state's largest TV news operation.

               

     

 

CORRECTION

        » The unaudited marketplace revenue among Hawaii's top five stations—KHNL, KHON, KFVE, KITV and KGMB—was $68 million in 2006, and is expected to be $48 million in 2009. The editorial above says those figures are Raycom Media's Honolulu revenues.