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Opposition Mounts over Hawaii TV Operational Merger
9/16/2009

HONOLULU: A citizen’s media group in Hawaii is challenging a planned operational merger of two TV stations serving the state.

“Media Council Hawai‘i--formerly the Honolulu Community-Media Council--will challenge the illegal Raycom Media deal involving Stations KHNL, KGMB, and KFVE at the FCC,” the group said in a statement released Sept. 4.

The group said it retained legal counsel to challenge a shared services agreement among KGMB-TV, KHNL-TV and KFVE-TV. The Institute for Public Representation at Georgetown University Law Center will pursue the Council’s position in Washington.

KGMB is the CBS affiliate in Hawaii owned by MGC Capital Corp. in Arlington, Va.; Raycom Media of Montgomery, Ala., owns KHNL and KFVE, the NBC and MyNetworkTV affiliates, respectively.

The two groups announced in August their intention to combine station operations and lay off 68 employees. The motivation was financial, as with many other stations around the country. Revenues are off by around 25 percent compared to recent years.

“The purpose of a shared services agreement is to not only secure the future of KHNL, K5 and KGMB, but to operate them more efficiently and effectively without diminishing the quality of news and other programming provided to our customers in Hawaii,” said Paul McTear, president and CEO of Raycom Media. “We realize there may be other financial and business options available, and while we are certainly open to discussing these with any interested party, the economic reality is that this market cannot support five traditionally separated television stations, all with duplicated costs. Rather than experiencing the loss of one, or possibly two stations in Hawaii, we intend to preserve three stations that provide important and valuable local, national and international programming to viewers in Hawaii.”

The SSA would create the largest news organization in Hawaii. The MCH countered that it would give Raycom undue media leverage in the island state.

“MCH asserts that the agreement is nothing more than a thinly veiled attempt to avoid regulatory scrutiny by the FCC, and that Raycom will exercise control over all three stations in defiance of FCC ownership rules,” the Media Council stated. “Raycom will control 45 percent of the revenues in this market as well as editorial control, programming and advertising sales related to all three stations.”

Members of the group charge that the SSA flies in the face of the public interest.

“Stations are granted licenses to serve the public interest in the communities they serve,” said Chris Conybeare, president of MCH. This arrangement will reduce diversity of opinion, create canned newscasts, increase advertising rates, strangle independent programming, and raise barriers to any who wish to enter the market. These effects are all contrary to public interest and the law.”

Raycom was the target of a Department of Justice lawsuit last year when it could not divest a station in Richmond, Va., under terms the DOJ laid out for Raycom’s acquisition of another station there.

More on Raycom’s operations:
“Scrutiny grows over Raycom’s Hawaii TV station merger,”
at the Honolulu Advertiser.

August 28, 2008: DOJ Files Suit Against Raycom
The U.S. Department of Justice has filed a civil lawsuit today against Raycom Media of Montgomery, Ala., because the company failed to sell a TV station in Richmond, Va. Raycom was required to sell a station as part of a deal it cut with the DOJ when the media company acquired WWBT-TV from Lincoln Financial Media last April.
 
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