KHON deal may not end duopoly

The sale of the state's top-rated TV station raises the possibility of continued joint operation with KGMB

CORRECTION Saturday, Oct. 01, 2005 » The duopoly between local television stations KHON and KGMB will end when the recently announced sale of KHON closes, but the stations may be jointly operated until KGMB is sold. A headline yesterday on Page C1 in the morning edition and on Page C2 in the afternoon edition incorrectly said the duopoly would not end. The Honolulu Star-Bulletin strives to make its news report fair and accurate. If you have a question or comment about news coverage, call Editor Frank Bridgewater at 529-4791 or email him at corrections@starbulletin.com.

The new buyers of Hawaii's top-rated television news station, KHON, may also take over operations of KGMB if a separate buyer is not found for the sister station, leaving persistent concerns among watchdogs about independent media ownership.

4 TV STATIONS SELL Price: $259 million What it includes: KHON and three mainland sister stations Buyers: Blackstone Group, a New York-based private equity firm, and California-based SJL Broadcast Group

KHON and KGMB are currently owned by the same company, Indiana-based Emmis Communications Corp. The company announced the $259 million sale of KHON and three mainland sister stations yesterday to the Blackstone Group, a New York-based private investment firm, and SJL Broadcast Group of California.

If no buyer materializes for KGMB when the sale of KHON is completed, Emmis is endeavoring to work out a deal to allow the two stations to continue sharing management, said Rick Blangiardi, Emmis' local general manager and vice president.

A buyer is still being sought for KGMB, WCKF in Orlando, Fla., and WVUE, New Orleans' Fox affiliate.

The two Honolulu stations have been owned and operated by Emmis since 2000 under a long-extended waiver of federal law that prohibits a single company from owning two top-rated television stations in the same market.

In the case of KHON and KGMB, the arrangement, known as a duopoly, covers a statewide audience, and not just a town or city.

The possibility of continued joint management of two statewide television stations is troublesome to Chris Conybeare, a media attorney and professor at the University of Hawaii-West Oahu.

"I just think that that language is of great concern," he said. "I am skeptical that this language would not be utilized to continue the duopoly, flying in the face of rules prohibiting that."

Local media observers have watched a six-month waiver of the duopoly rule turn into a five-year waiver, Conybeare said.

The SJL Broadcast Group was founded in 1983 to establish a group of network-affiliated television stations. The Blackstone Group was founded in 1985 and has raised $34 billion to invest in private equities, real estate, corporate debt and other areas.

Emmis, primarily a radio broadcaster and regional magazine publisher, entered television broadcasting in 1998 with the purchase of KHON and three other Fox affiliates from SF Broadcasting. Emmis then bought KGMB as part of an eight-station deal with Lee Enterprises in 2000 and combined some back-office and technical operations locally with KHON.

The company announced its intention to sell its 16 TV stations, including KGMB and KHON, in May.

After taking part in a 2 a.m. conference call of Emmis' general managers yesterday, Blangiardi headed two very different staff meetings, first in the morning at KHON, then in the afternoon at KGMB.

"We acknowledged there was a bittersweet moment because even though we've been anticipating new ownership and the excitement that comes with that, we're nonetheless really sad to be losing a really good owner in Emmis," he said.

"What we talked about here at KGMB9 was to reassure the men and women that this station has great momentum ... and that the contributions everybody is making will take us to a great situation with a new owner when the time comes."

Blangiardi may also remain at the helm of one or both stations. "Last week the company presented me with a new, multiyear contract that was agreed to by whatever potential buyers they were talking to. For all intents and purposes, while I have not signed anything yet, we have a deal," he said.

He had already decided to stay in Hawaii, no matter the outcome of the sale or sales.

Emmis has now sold $1 billion worth of television stations around the nation and is continuing to look at alternatives for its three remaining stations, said Jeff Smulyan, the company's chairman and chief executive.

Smulyan leads one of eight groups trying to buy the Washington Nationals from Major League Baseball. The league has set a $450 million price for the team and Emmis will put $100 million into Smulyan's bid.

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