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The Honolulu Advertiser
Posted on: Thursday, October 8, 2009

Media council challenges merger

BY Rick Daysog
Advertiser Staff Writer

A local media watchdog group has asked the Federal Communication Commission to stop the merger of news and business operations of three of the state's five largest television stations.

Media Council Hawaii said in its filing with the FCC yesterday that the so-called shared services agreement between KGMB9, KHNL and K5 television stations will reduce competition, leading to "less diverse and lower quality news programming."

"By concentrating editorial control this merger will reduce competition in local news and programming, it will reduce diversity of viewpoints and will lower the quality of news and programming," said Chris Conybeare, president of the media council.

In August, Raycom Media of Alabama, which owns KHNL and K5, and Virginia-based MCG Capital Corp. announced plans to merge newsrooms and simulcast some news programs.

The move will result in the terminations of a third of the stations' staff.

Raycom has said that the deal was needed to prevent one or two of the stations from going under.

Raycom has said the shared services agreement doesn't require FCC approval because there's no change of ownership and the licenses of the stations aren't being transferred.

"The arrangements we are entering into with MCG comply with the law, are not unusual, do not require FCC approval, have been vetted by FCC counsel and will enable local service to be preserved and strengthened," John Fink, KHNL's general manager said yesterday.

In its filing with the FCC yesterday, the media council said the deal is in effect an unauthorized transfer of control that's designed to skirt the commission's oversight.

It is asking the FCC to issue a stand-still order preventing Raycom and MCG implementing its shared services agreement. The deal is expected to take effect this month.

Conybeare said the media council and its attorneys, the Institute for Public Representation at Georgetown Law, will be meeting this week with attorneys for the U.S. Justice Department's Antitrust Division to discuss the antitrust implications of the deal.

He noted that the deal will leave the combined KGMB, KHNL and K5 operation with about 44 percent share of the local television advertising market, creating barriers to entry from potential competitors.

The council cited a recent study by the Television Bureau of Advertising showing that the next largest television station, KHON, currently has 27 percent of the local market while KITV has nearly 20 percent of the local market.