Big B Files Assessment of the Recent St Louis Radio & Television Ownership changes and their Impact on St. Louis Television is the Subject of this Big B File.
Let us first begin by addressing the recently announced merger between the Gannett Corporation and Belo Corp., parent companies of KMOV News 4 and KSDK News Channel 5 in St. Louis. On June 13th, Gannett Corporation announced that announced this morning that it will purchase Belo Corp. for $2.2 Billion Dollars. If the deal is given the approved U.S. Department of Justice (DOJ) antitrust approval, Federal Communications Commission (FCC) approval, and approval by holders of two-thirds of Belo shares…..Gannett will become the fourth-largest owner of major network affiliates in the U.S. behind Sinclair Broadcast Group (SBGI).
In a roundabout way of “complying” with FCC Duopoly Rules, Gannett is in turn selling KMOV-TV in St. Louis, KTVK-TV and KASW-TV in Phoenix and KMSB-TV and KTTU-TV in Tucson (Arizona) to essential subsidiaries of Gannett via Sander Operating Co. and Tucker Operating Co…..While not technically violating FCC Duopoly Rules in regards to TV Station ownership, I do believe that this proposed sale does violate FCC Duopoly Rules as written AND intended.
The following are the FCC Duopoly Rules and Station Ownership Rules (47 C.F.R. §§ 73.3555(b), (a), (d), and (c), and 47 C.F.R. § 73.658(g) of FCC Rules) that pertain to the situation of the recently announced merger between the Gannett Corporation and Belo Corp (St. Louis DMA was ranked 21st largest DMA in America as of the writing of this Big B File)……
In DMAs ranked 21 and smaller (St. Louis is DMA #21), the FCC presumes that a proposed newspaper/broadcast combination is not in the public interest – meaning that proposed pairings in such markets face a heavy burden in attempting to win approval. The negative presumption can be reversed, however, in two special circumstances: (1) if the newspaper or broadcast station is “failed” or “failing,” as defined in longstanding FCC rules; or (2) if the proposed combination results in a new source of a significant amount of local news in a market, defined as a station that for the first time begins offering at least seven hours of local news programming per week. Broadcasters in combinations approved under this “new news programming” standard are required to report to the FCC each year to show they are in compliance.
No matter which presumption applies, all proposed combinations also are reviewed under a four-factor analysis. The Commission considers:
- the extent to which the combination will increase the amount of local news in the market;
- whether each media outlet in the combination will exercise independent news judgment;
- the level of concentration in the DMA; and
- the financial condition of the newspaper or broadcast station, and whether the new owner plans to invest in newsroom operations if either outlet is in financial distress.
- – Review of the Broadcast Ownership Rules | Newspaper/Broadcast Cross-Ownership
The only exception to this rule that the FCC has allowed or should allow is the case of stations such as was the case of WBUI-TV WB23 in Decatur, IL. In that case, The FCC waived its duopoly rules to allow Gocom Media to purchase WBUI-TV Decatur, Ill., from ACME Television under the portion of the above FCC rule that says “the financial condition of the newspaper or broadcast station, and whether the new owner plans to invest in newsroom operations if either outlet is in financial distress”.
Dual TV Network Ownership. The rule prohibits a merger among any two or more of these television networks: ABC, CBS, Fox, and NBC.
Local TV Multiple Ownership. The rule allows an entity to own up to two TV stations in the same DMA if either (1) the service areas – known as “Grade B signal contours” – of the stations do not overlap; or (2) at least one of the stations is not ranked among the top four stations in the DMA (based on market share), and at least eight independently owned TV stations would remain in the market after the proposed combination.
- – Review of the Broadcast Ownership Rules | Additional Ownership Rules
As I said on Facebook on July 28th, I never thought I would say this……but I actually agree with the FCC on the part of the FCC’s television duopoly rule regarding having one company or person own more than one of the top four rated TV stations in the same market i.e. KMOV News 4 and KSDK News Channel 5 in St. Louis. I believe that, if the FCC approves this deal as constituted now and not force Gannett to sell KMOV-TV in St. Louis, KTVK-TV and KASW-TV in Phoenix and KMSB-TV and KTTU-TV in Tucson (Arizona) to Broadcast companies or individuals with ABSOLUTE NO TIES to Gannett and Belo instead of essential subsidiaries of Gannett i.e. Sander Operating Co. and Tucker Operating Co., it will set one of the most dangerous precedents that I have ever seen set in the Broadcast industry!
There is a good reason that these particular FCC duopoly Ownership Rules exist in the first place. Let me cite another example of the attempted sale by Sinclair Broadcast Group in 1998 of WICS-TV in Springfield, IL, WICD-TV in Champaign, IL and KGAN-TV in Cedar Rapids, Iowa to Sunrise Television. Basically, Sinclair tried to sell WICS, WICD, and KGAN to Sunrise Television in September 1998 pending FCC approvals. Citing the FCC’s Duopoly Rules and the fact that Sunrise Television was then owned by the investment firm of Hicks, Muse, Tate & Furst (HMTF) just happened to have been a major stockholder of LIN TV Corporation (now Lin Media), who at the time also owned WAND-TV in Decatur, IL. This would have violated the FCC’s Duopoly Rules since the top four stations in the Champaign-Springfield-Decatur, IL (DMA #83) Market are WCIA-TV, WICS-TV/WICD-TV in Springfield/Champaign, WAND-TV in Decatur, and WRSP/WCCU-TV in Springfield/Champaign-Urbana.
Let me now address the second Recent St Louis Radio & Television Ownership change and its Impact on St. Louis Television….which was announced on July 1st between the Tribune Company and Local TV Holdings, LLC, owners of KPLR-TV 11 (CW) and KTVI-TV FOX 2 here in St. Louis, MO. As I said before, on July 1, 2013, it was announced that the Tribune Company is buying all of Local TV’s 19 television stations in 16 TV markets across the country for $2.725 billion in cash, including KTVI-TV Fox 2 here in St. Louis. According to Jacob Newkirk of Jake’s DTV Blog………
“The move will give Tribune, which owns CW affiliate KPLR in St. Louis, ownership of the station that runs that one, KTVI-FOX 2. (Tribune also owns and operates Indianapolis-market FOX affiliate WXIN and CW affiliate WTTV/WTTK. -Ed.).
Upon closing, the acquisition will immediately transform Tribune into the country’s largest commercial TV station owner, with a total of 42 stations from New York to Los Angeles and Miami to Seattle. Importantly, because most of Local TV’s stations are ranked #1 or #2 in revenue share in their respective markets, the transaction will generate significant free cash flow and be immediately accretive to Tribune’s earnings.”
- – “Gannett announces that it’s buying Belo Corp. for $2.2B (Billion)”
- Jacob Newkirk / Jake’s DTV Blog – Thursday, June 13, 2013
The Big B Files believes that, unlike the Gannett/Belo deal, there will be no issues that will come up in the approvals process of the Tribune/Local TV and that the deal between the Tribune Company and Local TV Holdings, LLC that will transfer the ownership of the Local TV Holdings, LLC stations including KTVI-TV FOX 2 to Tribune Company without any problems whatsoever.
And that is the Big B Files. Click on the comments link below and let me know what you think . . . . I’m Bryan Hewing.
BIG B FILES UPDATE
Although I said that “The Big B Files believes that, unlike the Gannett/Belo deal, there will be no issues that will come up in the approvals process of the Tribune/Local TV and that the deal between the Tribune Company and Local TV Holdings, LLC that will transfer the ownership of the Local TV Holdings, LLC stations including KTVI-TV FOX 2 to Tribune Company without any problems whatsoever.” Jacob Newkirk of Jake’s DTV Blog is now reporting that Variety Magazine is reporting in its article “Fox Steps Up its Pursuit of Station Acquisitions in NFL Markets” on its website dated August 16, 2013 at 05:11PM PT that the Fox Broadcast Network is looking at buying up stations in TV Markets that are home to NFL teams…..including St. Louis.
“The two stations in Charlotte, N.C. that Fox Television Stations Group gobbled up in January may have only been the appetizer.
The station arm of 21st Century Fox is sniffing around acquisition targets in several major markets, including Seattle, St. Louis and San Francisco. The push is part of a larger strategy to add to its station holdings in NFL markets, particularly markets with NFC teams, the conference for which Fox has a TV rights package. Fox at present has O&Os in 11 of the 16 NFC markets.”
- “Fox Steps Up its Pursuit of Station Acquisitions in NFL Markets” By Rachel Abrams
- Variety Magazine (Website) – August 16, 2013 | 05:11PM PT
Here’s what this could mean. FOX could either make a challenge for KTVI via making a better offer or hostile takeover….or buy one of the other St. Louis stations like KDNL ABC30, KNLC 24, WPXS 13, or WRBU My46 (Most Likely station) and we would be looking at yet another affiliation switch in St. Louis since 1994. and here’s the kicker…….the Fox Broadcast Network Actually owned KTVI-TV from 1996 until 2007!