Emmis seeking waiver extension
By Andrew Gomes
Advertiser Staff Writer
Emmis Communications Corp. has asked federal regulators to extend for another year an exemption allowing the Indianapolis-based company to own both KHON and KGMB under a waiver of rules that prohibit one company from controlling two of the top four television stations in a single market.
The waiver, if granted, would be the fourth for Emmis, which acquired KGMB, the local CBS affiliate, as part of a multi-station purchase in October 2000, and has been given three six-month waivers as it tries to sell one of the stations. The current waiver will expire April 1.
Emmis wants an additional year to sell either KGMB or the local Fox affiliate, KHON, because of what it says are poor market conditions that have inhibited a sale, according to Emmis' application to the Federal Communications Commission.
"Because Emmis' divestiture efforts continue to be unsuccessful and it appears unlikely that industry and market conditions will improve materially in the near future, Emmis requests a one-year extension of the temporary waiver period," the application said.
The FCC had given Emmis previous waivers because the agency was satisfied the company has been making a "good-faith effort" to sell one of the stations.
"We don't want to force licensees into a fire sale," said Clay Pendarvis, chief of the FCC's television branch. "We want to give them the opportunity to divest of a station in an orderly fashion."
Emmis said it identified eight potential buyers in the past several months from which four "expressions of interest" were made.
Three of the four made offers that would have forced Emmis to take a significant loss and contained conditions deemed unreasonable by Emmis' broker, H.B. La Rue Media Brokers, according to Emmis. The other interest was withdrawn.
Within the past few days, another potential buyer entered into a confidentiality agreement to explore a purchase of one of the stations, Emmis said in its request.
But Emmis' broker foresees little likelihood chances for a sale will improve materially this year, Emmis said.
The company cited an 8.2 percent decline in Hawai'i television advertising revenues last year, mostly attributed to Sept. 11.
Also, Emmis said the Hawai'i television market has 40 percent higher operating costs, 50 percent lower profit margins and almost 50 percent lower national advertising compared with similar-size markets on the Mainland — all of which have hampered sale efforts.
Emmis doesn't see a rebound in advertising trends until the third or fourth quarter this year.
In granting Emmis' previous extension, the FCC recognized that "specific factors discouraging purchase of a full-service station in the Honolulu market" created a "substantial risk that holding Emmis to its current ... divestiture period could result in a forced sale," according to Emmis.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
