The head of the primary Capitol Hill lobbying group representing America’s small-sized and tiny-market MVPDs has lashed out against Gray Television for blaming the Justice Department‘s refusal to allow it to purchase a Class A TV station in Wyoming as a primary reason for major job cuts at the news department of its existing station in the contested market.
A statement delivered to local staff from a Regional VP at Gray, obtained Thursday by RBR+TVBR, offers in detail just how severe the layoffs are.
It involves top-rated NBC affiliate KCWY-13 in Casper, Wyo., which uses channel 13.2 to deliver programming from The CW to the city.
As RBR+TVBR first reported on Feb. 13, 2018, Gray filed an asset purchase agreement with the FCC to acquire KGWC-14 in Casper, Wyo., a CBS affiliate, along with two other stations and two translators, from Mark III Media for $15,716,667.
This deal effectively created a duopoly in Casper. But, Gray argued, as KGWL “does not separately achieve measurable ratings,” it argued that it is within the FCC’s duopoly rules regarding multiple ownership in the same market.
What about KGWC-14? The purchase contract contained a requirement that Gray divest that station’s license to a third party promptly, and Gray intended to donate this station’s license to a non-profit entity.
However, the Justice Department disagreed, and judged KGWL as a Casper station. As such, the CBS-NBC duopoly was nixed.
The result: KCWY “will be dramatically reducing the local news operation.”
The inability to create the duopoly is the reason Gray gives.
As of today, KCWY has 15 individuals in its news department, producing local newscasts from 5:30am to 10:30pm weeknights and at 5pm and 10pm on weekends.
Come April 9, Gray will take a page from former Raycom stations KHNL and KGMB in Honolulu, which brand their news as “Hawaii News Now,” by rebranding its news at KCWY and Cheyenne, Wyo.-licensed KGWN as “Wyoming News Now.”
It will be run out of Cheyenne. Four reporters will remain in Casper.
The Gray regional VP said, “We will simulcast morning news, noon news, late news and weekend news. We will only produce unique newscasts for Casper at 5pm and Cheyenne at 5:30pm.”
The 6pm news slot will be eliminated, with the syndicated game show Jeopardy moving to that time slot.
“We will make every effort to offer the impacted employees new positions in Gray stations in larger markets across the country,” the VP said.
Explaining its actions, he added, “Quite simply, Gray has been forced to take this unfortunate action because DOJ blocked our acquisition of the CBS affiliation contract for our Casper low-power television station late last year. As part of that transaction, we would have added local news to the CBS stream, added that CBS channel to CBS All Access and several OTT platforms, replaced Rapid City, South Dakota, signals in Sheridan and Gillette, Wyoming with local Wyoming signals; and donated the CBS station’s FCC license to the local PBS affiliate.”
Thus far, Gray has invested some $2 million in its Casper station in just the past few years “to improve the news product and make the operation more efficient.”
Nevertheless, the regional VP notes, “the small size of the market combined with fierce competition from MVPDs, Google, Facebook, and much larger unregulated companies have caused us to lose money every year. As we told DOJ, unless we acquire the CBS affiliation and thereby trigger a second retransmission revenue stream to offset our losses, we would be forced to eliminate most local news in Casper. DOJ was not persuaded by the value of preserving a competitive local news operation in this market nor by any of the other public interest benefits that the transaction would have permitted.”
Again noting the “significant amounts of money and time” expecting a duopoly, the regional VP concludes, “[We] simply could not overcome DOJ’s objections. We are therefore very regretfully undertaking these difficult and painful steps to reduce the financial losses in Casper.”
American Cable Association President/CEO Matthew M. Polka dismissed the explanation as folly.
“It is truly outrageous for Gray to use the DOJ’s well-reasoned decision to block its creation of a duopoly as an excuse to drastically cut back its local news coverage in Casper,” said Polka. “Gray is one of the largest broadcasters in the country, having just purchased all of Raycom’s stations. It just reported ‘record operating results.’ Surely, Gray can’t really mean that it can’t support local news in Casper because it can’t control two Big Four affiliates there. Local news, after all, represents the bare minimum responsibility that a local broadcaster has.”
As Polka sees it, TV station owners, including Gray, “have a record of making newsroom operation cuts even when regulators approve their mergers.”
He pointed to the layoffs of six employees at WCAX-3 in Burlington, Vt., less than a year after buying the CBS affiliate serving Plattsburgh, N.Y., and much of Quebec. Gray alluded that no layoffs were planned at the time it made the WCAX purchase, Polka notes.
He then argued that DOJ “took the appropriate step in stopping Gray’s ‘Casper Caper,’ as the establishment of Big Four duopolies produces market leverage that results in pay-TV providers and their customers paying above-market rates for retransmission consent, and other harms.”