TV deal includes payment of $22M


POSTED: Saturday, November 07, 2009

The shared services agreement between KGMB-TV, KHNL-TV and KFVE-TV will have Alabama-based Raycom Media Inc. pay $22 million to new KFVE owner MCG Capital Corp. of Virginia, according to a filing with the U.S. Securities and Exchange Commission.

The payment amounts to a sale, which would require regulatory approval the parties have said was unnecessary.

MCG's SEC filing said it completed an asset-exchange transaction with Raycom on Oct. 26.

As part of a deal dated Oct. 16, MCG exchanged with Raycom certain assets used in the operation of MCG's KGMB-TV “;in return for a $22.0 million note, with current pay interest,”; as well as programming assets used in the operation of K5.

Also on Oct. 26, it entered into a shared services agreement with Raycom in which Raycom is providing services to K5, the Wednesday filing said.

Since Oct. 26, Raycom has operated CBS-affiliate KGMB as well as NBC affiliate KHNL, while MCG has assumed operation of KFVE. While the licenses of KGMB and KFVE have not changed hands, nearly every other aspect of the stations has swapped places, leaving countless digital over-the-air viewers around the state unable to watch CBS and KGMB programming.

The $22 million was not mentioned by Raycom President and Chief Executive Officer Paul McTear during an Aug. 18 news conference announcing the TV stations' deal.

Rather, he said, “;there's no cash being exchanged. Assets are being exchanged.”;

At a Star-Bulletin editorial board meeting later that day, he said, “;I'm not paying anybody. There is no money changing hands at closing.”;

McTear did not respond to the Star-Bulletin yesterday, nor did officials with MCG Capital or GMC Television Broadcasting LLC.

Watchdog organization Media Council Hawaii filed an objection to the deal with the Federal Communications Commission and had received copies of the Raycom-MCG agreements last month with financial details redacted.

“;This whole deal has been an attempt to obscure and hide and really keep from the public the complete takeover by Raycom of all these stations,”; said Chris Conybeare, president of Media Council Hawaii.

“;This disclosure (to the SEC) helps a great deal because it's clear they're trying to hide things ... saying no money's changing hands when in fact it is. Hopefully we'll keep finding more and more truth.”;

In the coming week, Conybeare will meet with attorneys from the Institute for Public Representation at the Georgetown University Law Center who are representing it in the FCC complaint. He also will meet with U.S. Sen. Daniel Inouye on the controversy.

“;He's been pretty good on localism and audience being served on other issues, and I have a feeling he will be supportive on those levels,”; Conybeare said.