The arrangement between Raycom Media and MCG Capital that combines the operations of three Honolulu television stations is getting close scrutiny at the FCC, which is asking for additional information. A matter of concern is MCG’s disclosure to the SEC that it’s holding a $22M promissory note as part of the agreement.
The shared services agreement (SSA) brings together Raycom’s NBC KHNL-TV and MyNetworkTV KFVE-TV with MCG’s CBS KGMB-TV. Raycom is in the operational driver’s seat with the exception of certain licensee responsibilities that MCG retains for its station, including responsibility for administration functions, no less than 85% of the programming and ultimate decision-making power.
According to the Honolulu Star-Bulletin, the FCC is not pleased that Raycom redacted certain bits of information and is pressing for full details of the SSA.
For its part, MCG told the Security and Exchange Commission that it “…exchanged with [Raycom] certain assets that were used in the operation of [Raycom’s] Television Station KGMB in Honolulu, Hawaii in return for a $22.0 million note, with current pay interest, and certain of the programming assets that were used in the operation of KHNL/KFVE, LLC’s Television Station KFVE-TV.”
The latter remark refers to the fact that Raycom is handling the programming of the NBC and CBS stations, while MCG looks after the MNT station. KGMB and KFVE essentially swapped call letters and programming.
The FCC noted that the interest attached to the promissory note was missing from a Raycom filing, and further advised the principals that it could not honor a blanket request for confidentiality, and that such requests would have to be made in accordance with specific FCC rules.
RBR-TVBR observation: Hold on to your hats – SSAs were very much on the minds of watchdogs at the FCC ownership workshops – they don’t like them – and a close look at this one could result in a close look at a whole lot of them.