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Station owner fights opposition to merger


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POSTED: Saturday, October 17, 2009

KHNL/KFVE-TV owner Raycom Media Inc. is fighting Media Council Hawaii's opposition to its impending shared services agreement in a filing with the Federal Communications Commission and has revealed its agreement with KGMB-TV owner MCG Capital Corp. for the first time.

Raycom seeks to discourage the commission from blocking the merging of the stations, is urging the commission to “;refrain from inserting itself into a private transaction”; in which it has no standing, and dismisses MCH's petition as being based upon “;inaccurate hearsay press reports and its own surmise and misconceptions.”;

The media council did not have access to the shared services agreement before filing its opposition on Oct. 7.

The agreement is “;necessitated by the severely depressed and worsening television advertising market in Hawaii,”; Raycom's filing says.

KHNL and KFVE are expected to “;suffer $1.8 million in negative cash flow”; this year, a nearly 300 percent increase from 2008 losses of $667,000.

Raycom's filing indicates that only two management employees will work for MCG Capital in Hawaii.

; It says while the stations will maintain separate sales forces that will keep ad rates confidential from one another, Raycom “;shall make available to (MCG) certain employees”; to sell advertising on MCG's station.

The media council asserted in its Oct. 7 filing that Raycom, licensee of NBC-affiliate KHNL and MyNetworkTV-affiliate KFVE, would illegally gain control of Honolulu CBS-affiliate KGMB in the deal, which would violate FCC rules limiting ownership and control to two stations in a single market and no more than one of the top-four-ranked stations in any market.

Under the shared services agreement, Raycom and MCG's HITV License Subsidiary Inc., the licensee of KGMB, will swap call letters and programming between KGMB and KFVE.

“;It's not as innocuous as just (swapping) the content,”; said Gerald Kato, media council board member and journalism professor. “;They're swapping a major (station) and a minor (station).”;

Call-letter changes are common in broadcasting, so the FCC has assigned facility ID numbers to station licenses that remain constant. KHNL's facility ID number is 34867, KFVE's is 34445 and KGMB's is 36917.

Under the swap, MCG Capital's HITV still will be the licensee over facility No. 36917 (now KGMB), but it will be called KFVE and will carry MyNetworkTV and UH sports programming.

“;The fact of the matter is, Raycom effectively will control two of the four major stations in this market,”; Kato said.

The stations have begun dismantling news sets in preparation for KGMB to move into KHNL/KFVE's Waiakamilo Road facilities and the merging of news departments.

Termination notices that began to take effect yesterday put former “;Sunrise, Early Edition”; anchor Ramsay Wharton out of work. Reporters Tina Chau and Ashley Nagaoka pull their last shifts tomorrow. At KHNL, reporter Leland Kim and others also have lost their jobs. Both stations are losing on-camera and off-camera employees.