Posted on: Wednesday, May 11, 2005

Emmis may sell TV stations

Advertiser Staff

Indianapolis-based Emmis Communications Corp. yesterday announced it is considering selling its 16 television stations, including local Fox affiliate KHON and CBS affiliate KGMB.

The sale of some or all of its TV stations would help Emmis reduce its debt and put it in a better position for growth, said Emmis Chief Executive Jeffrey Smulyan, who founded the company in 1979.

Emmis also owns about 24 radio stations and six regional magazines across the country.

"Our decision to explore strategic alternatives for our television assets comes from our ongoing dedication to lowering our debt and putting us in a better position for growth, but also from the recognition that, in order to reach their full potential, our television stations need to be aligned with a company that is larger and more singularly focused on the challenges of American television," he said.

A sale also could boost competition, if ownership of the two local stations were split up, according to observers.

Emmis hired The Blackstone Group as financial adviser and Paul, Weiss, Rifkind, Wharton & Garrison LLP as its legal counsel to assist in the sale of the TV stations. Emmis owns the two Hawai'i stations under a Federal Communications Commission exemption that has generated criticism that dual-ownership results in less competition and diversity of news coverage and analysis. Any potential sale of the stations likely would require FCC approval.

"It could be a hopeful opportunity that the landscape becomes more diverse and competitive," said Sean McLaughlin, public policy chairman for the Alliance for Community Media, an advocate for community access issues. "We could have two views, where we only have one in terms of ownership."

McLaughlin also is head of Akaku: Maui Community Television.

Mike Rosenberg, general manager of KITV, agreed that a sale could result in split ownership of Emmis' local stations, though it could be a year before anything happens.

"I can't imagine a scenario where the FCC would allow a buyer to buy both stations," he said.

In 2003 the FCC moved to relax rules that restrict media ownership, which would have made it possible for the owner of a newspaper to buy a television station in the same market. In 2004 a federal appeals court blocked many of those rules from taking effect.

Major media companies have since asked the U.S. Supreme Court to review the case. Additionally, Congress is expected to review media ownership rules next year.

Meanwhile the future of media ownership regulations remains uncertain, said Mike Fisch, The Honolulu Advertiser's president and publisher.

"Everybody's waiting to see what the rules are going to be," he said. "I think it's far from sorted out."

Fisch said there were no discussions locally about The Advertiser acquiring a TV station, though such decisions would be made by McLean, Va.-based Gannett Co., which owns the newspaper.