KGMB9, KHNL and K5 television stations will merge operations, eliminate more than a third of their staffs and simulcast news programs to cut costs and ensure they survive the current economic decline.

Responding to a drop in ad revenue, the local CBS affiliate, NBC affiliate and the broadcaster of University of Hawai'i sporting events will combine newsrooms to create what they said would be the state's largest television news department.

The three stations will continue as separate channels and non-news programming will remain largely as it is today.

"This market cannot support five traditionally separated television stations, all with duplicated costs," said Paul McTear, president and CEO of Alabama-based Raycom Media, owner of KHNL and K5.

Media watchdogs said the arrangement could mean the loss of separate voices in local news coverage.

"Democracy requires diversity of opinion and robust communication of information," said Chris Conybeare, president of the Honolulu Community Media Council. The merger "may help their bottom line, but will result in layoffs, diminish diversity, and rob Hawai'i's public of the best use of our airwaves."

McTear said the merger, which is to be completed by November, will not require approval from the Federal Communications Commission because ownership of the stations and their FCC licenses won't change hands.

FCC rules prohibit one company from owning more than one television station in a single market.

The Media Council said the agreement is an attempt to skirt FCC rules. "I think this looks like a shell game," Conybeare said.

McTear said the merger is needed to prevent one or two of the stations from going under.

He said annual television ad revenue is down by about $20 million, or about 30 percent, from three years ago.

"Rather than experiencing the loss of one, or possibly two stations in Hawai'i, we intend to preserve three stations that provide important and valuable local, national and international programming to viewers in Hawai'i," McTear said.

McTear's company, Raycom, has similar arrangements with TV stations in Wilmington, Del., and Columbia, Ga.

KGMB WILL MOVE

McTear announced the merger at a news conference in Honolulu yesterday. KGMB's owner, MCG Capital Corp. of Virginia, did not send a Mainland executive to the news conference but was represented by Rick Blangiardi, president and general manager of KGMB.

In the deal, the intellectual properties held by KGMB, including its CBS network affiliation and revenues derived from the network affiliation, will go to Raycom.

MCG will get revenues from K5, including revenues from broadcasting UH athletic events. MCG's revenue stream will likely be reduced under the arrangement, but its costs also will go down.

KGMB will move from its Kapi'olani Boulevard offices to KHNL's facilities in Kalihi. MCG sold the Kapi'olani property last year to a local investment group for $12.4 million and had occupied the building under a lease-back arrangement.

In addition to the merged news operations, the companies will share the costs for KHNL's facilities in Kalihi, as well as engineering, production and marketing costs. The stations will have separate sales teams.

Blangiardi will head KHNL and KGMB. John Fink, president and general manager of KHNL and K5, will head K5.

CBS programs — such as "60 Minutes," "CSI" and "Late Night with David Letterman" — will remain on KGMB while NBC shows — including "The Late Show" and "Saturday Night Live" — will remain on KHNL.

Yesterday's announcement wasn't a surprise to workers at the stations, who have heard rumors about it for several months.

But several expressed worries about their job security at time when the local economy has lost more than 30,000 jobs and the statewide unemployment rate has soared to 7.4 percent.

KGMB's employees will be terminated and they will have to reapply for positions at the combined operations.

Raycom Media is one of the nation's largest broadcasters and owns and operates 46 television stations in 36 markets.

MCG Capital, a private equity fund, bought KGMB in 2007 for $40 million.

68 LAYOFFS LIKELY

KGMB reported on its Web site yesterday morning that of the 198 employees now at all three stations, an estimated 130 would become part of the combined operations.

McTear said the 68 layoffs is based on projections and is just one of several scenarios that are being examined under the new agreement. The actual layoff count won't be determined until after management interviews staffers for positions in the combined newsrooms, he said.

Gerald Kato, journalism professor at the University of Hawai'i-Manoa, said the deal essentially creates a "tri-opoly" that gives the station owners a lot of leverage when it comes to setting advertising rates and controlling the scheduling of television programming.

Kato and the Media Council's Conybeare noted that KGMB and KHON — then owned by Emmis Communications Corp. of Indianapolis — operated under a duopoly arrangement for seven years with a waiver issued by the FCC.

That deal allowed the stations to share production costs and save money but also resulted in staff reductions and diminished the diversity of voices in the local news market, they said.

"You might have more news," Kato said, "But it might be more of the same news."