Saturday, May 8, 2010

FCC Probes Honolulu Three-Station TV Agreement

The shared services agreement between Raycom Media and MCG Capital that combined the operations of all three Honolulu television stations was challenged by Media Council Hawaii in a complaint to the Federal Communications Commission (FCC).

The FCC has determined that due to public interest in the matter, the proceeding will be treated under “permit-but-disclose” ex parte rules.

In doing so, the Commission ruled in favor of the Media Council over the objections of the two television companies, which hoped to restrict access to information on the proceedings.

According to a May 5, 2010 RBR-TVBR report, HITV License Subsidiary Inc., the license subsidiary of MCG, had argued for restricted status, but the FCC said, “Contrary to the assertion of HITV, we believe that classifying this proceeding as permit-but-disclose is in the public interest because the proceeding raises issues upon which the public has a demonstrable concern, especially within the affected market. In view of this and in order to assure the staff’s ability to discuss and obtain information needed to resolve the issues presented expeditiously, adoption of modified ex parte procedures is appropriate.” See

Treating this case as a "permit but disclose" proceeding, means that parties are not confined to the usual process of arguing their cases through written submissions served on all parties (or meetings at which all parties are present). Instead, interested parties can now meet with FCC decision-making staff (including FCC commissioners) on their own, as long as they file an "ex parte" notice in the record summarizing the presentations that they made. This process is usually used only for high-profile decisions with potential far-reaching impact or where new policy is potentially to be made.

In a Broadcast Law blog posting at, Davis Wright Tremaine attorney David Oxenford noted that this treatment of the Honolulu case signals that the FCC is taking a serious look at such local combinations as part of this year’s Quadrennial Review of media ownership regulation.

The blog post continues, "In recent years, as competition in the video marketplace has become more intense, in a number of broadcast television markets, competing stations have teamed up to combine certain of their operations to achieve economies while still allowing for some degree of independence of programming."

"Under these "shared services agreements", one station will provide back-office support and often advertising sales for another station in the market. Where the station providing the support programs less than 15% of the programming hours of the station being supported, the contractual arrangement is not "attributable under the FCC's multiple ownership rules."

"Thus, these services can be provided in circumstances where the supported station could not be owned by the station that is providing the services. Nevertheless, a number of these arrangements have been under attack from public interest groups, and recent Commission actions indicate that the FCC may well be reviewing its position on these sorts of agreements."

Many public interest groups despise these sorts of arrangements, arguing that even if combined stations have their own news programming, the news comes from one controlling management perspective and diminishes diversity of viewpoint and consumer choice.

Some members of the broadcasting management community argue that without such arrangements, many smaller stations would fail, particularly in smaller markets, and a failed station completely eliminates diversity of viewpoint and consumer choice.

Members of IBEW, NABET-CWA, and IATSE locals representing broadcast engineers at television stations around the country have voiced support for Media Council Hawaii in opposing such station consolidation and shared services agreements. These consolidation of facilities and shared serices agreements sacrifice quality, objective news reporting in exchange for the abilitiy to increase operating profits through staff reductions.

The use of shared facility and services agreements and the use of Local News Services (LNS) to consolidate news gathering crews (ENG) has raised a number of restraint of trade (through creation of barriers to market entry) issues being looked at by the Federal Trade Commission (FTC) as well as a possible Department of Justice (DOJ) probe of alleged anti-trust violations. If critics create enough buzz, the Justice Department’s Christine Varney might well scrutinize potentially anti-competitive practices and behavior by media companies.

The FCC will consider both the public interest diversity issue and the financial challenges facing broadcasters in the current competitive economic environment before coming to a decision. It will be interesting to see which way the Commission rules.

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Tribune Files For FCC Cross Ownership Waivers

The Tribune Company has filed FCC requests to keep certain properties together that require FCC waivers under its new proposed ownership structure.

Tribune is seeking to protect three cross-owned pairs involving one television station and one newspaper which include the pairings of WPIX-TV and Newsday in the New York City DMA, KTLA-TV and the Los Angeles Times in the Los Angeles DMA and WSFL-TV and the Sun Sentinel in the Miami DMA.

The same type of combination with the addition of an AM station in Chicago involving WGN-AM, WGN-TV and the Chicago Tribune has already been approved by a permanent waiver from the FCC.

Another seeks to preserve the existing flagship/satellite relationship between two full-power television stations, WTTV-TV Bloomington IN and its satellite, WTTK-TV Kokomo IN.

Two waivers are required in Hartford CT. For starters, there are two television stations, WTIC-TV and WTXX-TV, combined with The Hartford Courant, requiring a cross-ownership waiver on steroids. And the only reason Tribune was able to have WTXX in the mix in the first place is that it was acquired under a failed station waiver, which it needs to have renewed.

FCC Issues New Comcast/NBCU Comment Deadlines

RBR-TVBR: Interested parties that have something to say about the proposed merger of Comcast and NBC Universal have about a month and a half to get in their first salvo, and with replies and replies to replies factored in, the process will extend into August.

The FCC had asked the principals in the merger to prepare two additional reports on the merger, detailing the economics underlying the benefits the transaction is claimed to offer, and the other discussing the impact the transaction would have on the distribution of online video.

Those reports are in, so the commenting period may now begin.Initial comments, or petitions to deny, are due 6/21/10; replies and/or opposition to petitions are due 7/21/10, and replies to replies/oppositions are due 8/5/10.

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