FCC should review TV deal


POSTED: Friday, October 09, 2009

The Alabama-based owner of KHNL and KFVE television stations has exhibited astonishing audacity in suggesting that its hurried attempt to bring KGMB under its control does not require federal approval. The Federal Communications Commission needs to act quickly to open a review of the move, scheduled to take place in little more than a week.

Raycom Media Inc., a major television player, owns 46 television stations in 36 markets, including ownership of two stations in each of three of those markets. However, the FCC stepped in when Raycom, which owns the CBS affiliate in Richmond, Va., bought the competing NBC affiliate, and required Raycom to divest itself of the CBS station.

Raycom portrays the Honolulu transaction as a “;shared service agreement”; between itself and MCG Capital Corp., a Virginia-based venture capital firm that counts KGMB as its only TV station.

Media Council Hawaii, created nearly 40 years ago as the Honolulu Community-Media Council, challenged the deal on Wednesday, asking the FCC to issue a “;standstill order”; so the commission can hold hearings on the issue. The nature of the deal calls for such a review, despite Raycom's claim of compliance.

Under the plan, KGMB is to tear down its Kapiolani Boulevard tower and join KHNL at its new Kalihi facility. KGMB then would switch its call letters with KFVE, which would become the CBS affiliate under the KGMB moniker. Raycom would receive revenue from both the NBC and CBS affiliates, while MCG would receive what little revenue would be gleaned from the new KFVE.

FCC rules state that a single company may not “;directly or indirectly own, operate or control two television stations”; in the same market unless “;at least one of the stations is not ranked among the top four stations”; in that market.

KGMB and KHNL are ranked third and fourth respectively in the Honolulu market, with a combined 35 percent of the state's market share. (KFVE is ranked fifth, so Raycom is presently in compliance.)

The commission waived requirements during the Bush administration, by 3-2 votes along party lines, because of economic considerations. We are unaware of any waiver comparable to the Raycom plan, and the politics have shifted with the commission's makeup under the Obama administration.

The airwaves are in the public domain, and the reduction in TV news coverage is of concern. Dozens of the nearly 200 employees of the three stations are expected to be laid off, so the superiority of a new KHNL-KGMB newsroom promised to offset the reduction from four newsrooms to three is questionable.

Raycom must make its case to the FCC to determine if the public would be served.