TV merger opposition hits the FCC fan


POSTED: Thursday, October 08, 2009

Media Council Hawaii has asked the Federal Communications Commission for an emergency order to block KGMB-TV and KHNL/KFVE-TV from merging news and other operations under a “;shared services agreement”; announced Aug. 18.

“;This merger is not in the public interest,”; said Chris Conybeare, president of the group formerly known as the Honolulu Community-Media Council.

The agreement “;will harm our community,”; Conybeare said. “;Broadcasters are granted licenses to use the public airwaves to serve the public interest.”;

KGMB is owned by Virginia-based MCG Capital Corp. and KHNL/KFVE are owned by Alabama-based Raycom Media Inc.

The complaint alleges violations of FCC ownership rules and federal antitrust laws and was filed by the Institute for Public Representation of the Georgetown University Law Center on behalf of the media council. IPR also forwarded a copy to the U.S. Justice Department, with whom it planned a meeting today.

In addition to the media council's oft-expressed concern about the loss of an independent editorial voice in the market, the complaint alleges the stations' agreement will reduce competition in the sale of advertising time, “;which not only hurts local businesses, but forces the public to pay more in the form of consumer products.”;

It cites the Herfindahl-Hirschman Index, used to analyze concentration within a particular market. Honolulu's HHI is 1841.3, which reflects a highly concentrated market as defined by official merger guidelines used by the Justice Department and the Federal Trade Commission. Under the guidelines, mergers resulting in an index increase of 100 or more “;are presumed to create or enhance market power or facilitate its exercise.”;

; ; ; Were the Raycom-MCG agreement to take effect, Honolulu's HHI would skyrocket to 3095.24, the complaint says.

Raycom would control about 44 percent of the TV ad revenue market, which would prevent robust competition, it says.

Station officials have said the severe economic downturn caused them to seek this solution and have characterized it as a matter of survival.

Broadcasters enduring financial hardship have the option of selling a station or surrendering its license to the FCC for auction, said attorney Angela Campbell, director of the IPR. Alternately, Raycom and MCG could have filed an application with the FCC seeking a waiver of ownership rules to allow for merged operations, citing financial hardship as justification.

No applications pertaining to the shared services agreement have been filed with the FCC by either company.

Raycom President and Chief Executive Officer Paul McTear has expressed confidence that the agreement did not require regulatory approval from the FCC.

McTear did not respond to a Star-Bulletin call and e-mail yesterday, and attorneys representing the companies in FCC matters could be not be reached.

However, local executives made brief statements.

“;The arrangements that we're entering into with MCG comply with the law, are not unusual, do not require FCC approval have been vetted by ... counsel and will enable local service to be both preserved and strengthened,”; said John Fink, vice president and general manager of KHNL/KFVE.

KGMB President and General Manager Rick Blangiardi was aware of the media council filing, but said, “;As a matter of practice, we don't comment on active legal proceedings.”;

The IPR is representing organizations in markets where there is opposition to news organizations' agreements to share resources such as helicopters, but this sort of shared services agreement “;is so new”; that there is no precedent on record with the FCC, according to IPR director Campbell.

“;As far as I know, this will be the first time the commission's ever acted on”; a shared services agreement, she said.

Conybeare said, “;We're concerned if this deal is permitted here, it could be like the poster child for the worst-case scenario and be replicated many other places.”;

The nonprofit Media Council Hawaii was founded in 1970 to involve the public in media policy decisions, among other goals.