Tuesday, September 8, 2009

TV Stations' Pact Draws Fire

By Erika Engle

Officials say dwindling revenue prompted a sharing agreement

The shared-services agreement between KGMB-TV and KHNL/KFVE-TV to keep all three stations operating in the throes of the revenue-crippling recession was met with fear and loathing yesterday.

Advertising revenue for Honolulu's five major TV stations, which is projected to plummet to $48 million this year from $68 million in 2006, prompted the stations to find a creative solution to keep operating, officials said at a news conference.

KGMB is owned by Virginia-based MCG Capital Corp. and is its only TV station, while KHNL/KFVE is owned by Alabama-based Raycom Media Inc., which owns or operates stations in 36 markets in 18 states.
KGMB is a CBS affiliate, while KHNL is an NBC affiliate and KFVE is an independent station that airs University of Hawaii sports.

The programming arrangements will remain in place, though the KGMB and KFVE call letters will be swapped by MCG and Raycom in a pending filing with the Federal Communications Commission. KGMB and KHNL will be led by Rick Blangiardi, and John Fink will head KFVE, each as vice president and general manager.

When KGMB, which sold its property at 1534 Kapiolani Blvd. in January 2008, moves in to KHNL/KFVE's facility at 420 Waiakamilo Road in two months, the stations' news, marketing, engineering and possibly other departments will be consolidated, leading to layoffs of 68 people, up to 34 percent of the stations' combined work force of 198 full-time employees.

Paul McTear, Raycom president and chief executive officer, would not discuss layoff numbers at the news conference and later disputed the figure that was reported by KGMB and other news outlets, saying there was no official layoff tally.

KGMB employees received 60-day termination notices yesterday, and those who remain will become Raycom employees.

All employees will be interviewed to determine both the faces that viewers will see delivering the news and the employees who will keep their off-camera jobs. "Layoffs are possible at all three stations," said McTear, adding that Raycom will honor all contracts.

A KHNL reporter, who asked not to be identified, said a staff meeting confirmed rumors that had been swirling for months.

"For me personally, I'm single," the reporter said. "I can go back home, live with my parents. I'm really worried for people who have made their lives here."

The KHNL reporter said fellow employees are worried that KGMB management is calling the shots.

"We're going to be one team, but it's going to be a divided team," the reporter said.

McTear said in a meeting with the Star-Bulletin that the stations had "done some research."

"We're going to base a lot of our (employee retention) decisions based on what people want," McTear said.

The consolidation is "a sign of the times," said Joe McNamara, president and general manager of KHON-TV, Honolulu's Fox affiliate. "It gives us more of an opportunity, with one less voice in the marketplace. ... I'm sure we stand to gain from this."

KHON parent NV Broadcasting LLC, based in Atlanta, is in the process of a Chapter 11 bankruptcy proceeding.

It is too early to tell how the arrangement will affect the competitive environment, said Mike Rosenberg, president and general manager of KITV, an ABC affiliate.

Its owner, Hearst Corp., has declined to enter news-sharing agreements in several mainland markets, because "we want to be an independent voice in our community, and we're strong enough that we don't have to do that."

"When the economy rebounds, we'll be in a better position," Rosenberg said.

The agreement and the melding of two newsrooms into one to supply newscasts, some to be simulcast across multiple stations, is troublesome to Media Council Hawaii, formerly the Honolulu Community-Media Council.

"It just seems intentionally to avoid the FCC's ... ownership rules, and the consequences are already becoming clear," said President Chris Conybeare. "There are layoffs and less people covering the news, so diversity of opinion is lost."

He added, "I think the holders of (broadcast licenses) are supposed to serve the local market and not offshore corporate interests. There might very well be antitrust implications."

Star-Bulletin reporter Leila Fujimori contributed to this report.

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