Media Council Hawaii is calling upon the Federal Communications Commission to revoke the broadcast licenses of the stations comprising Hawaii News Now—KGMB-TV, KHNL-TV and KFVE-TV, which MCH President Chris Conybeare referred to as a “;zombie station.”;

The stations' agreement discourages the independent operation of KFVE by its licensee and its two employees, he said.

Documents that the FCC ordered the stations' licensees to release cement the media council's allegations that the companies' dealings amount to an illegal transfer of control of a broadcast license in violation of FCC ownership rules, leaders announced yesterday at a news conference.

KGMB and KHNL are licensed to Alabama-based Raycom Media Inc., while KFVE is licensed to HITV License Subsidiary Inc., an affiliate of Virginia-based equity firm MCG Capital Corp.

Raycom officials could not be reached, and Rick Blangiardi, general manager of KGMB and KHNL, had not seen the revised media council complaint and would not comment. Nor would John Fink, general manager of KFVE.

Media Council Hawaii and its attorneys with the Institute for Public Representation in Washington, D.C., have filed a supplemental complaint with the FCC asserting that the shared services agreement enabling the operation of Hawaii News Now “;is one of the most egregious violations of public trust and FCC rules in the country,”; Conybeare said.

Broadcast frequencies licensed to companies actually belong to the public, the council noted.

Raycom and HITV were ordered by the FCC to release un-redacted versions (Note: This is an 8.8 MB pdf file) of their shared services agreement, the term loan note, studio lease and purchase option agreement.

The documents show that HITV loaned Raycom $22 million for the purchase, which Raycom is required to pay back with 5 percent interest over a seven-year period.

The documents further reveal a complex financial arrangement wherein HITV pays for certain operational expenses, including employee salaries, utilities, insurance and others but that Raycom will reimburse the expenditures.

The council further alleges that the deal discourages HITV from exercising independent control over the station or performing well financially, because if the station's cash flow exceeds $29,761 monthly, HITV must give Raycom 90 percent of the profits.

Raycom's purchase option was assigned to Iowa-based Ottumwa Media Holdings LLC, now known as American Spirit Media LLC, which the council alleges is an affiliate of Raycom.

Raycom and HITV will file responses to the media council's filing, which the council will have a few days to rebut. The FCC's Media Bureau will then review all the documentation, but there is no timetable for a ruling by the bureau.

Should the FCC decide to revoke the broadcast licenses, as it has in cases where it has found “;lack of candor”; or other violations by licensees, the stations would not likely go dark. The FCC could appoint a trustee to continue their operation as one remedy, IPR officials said during the news conference.