The Media Council of Hawaii has seen to shared services contract between Raycom and MCG Capital, and believes the agreement creates an illegal television triple-header. It is arguing that not only should the SSA be broken up, but that the licenses for the stations should be revoked.
MCH president, Chris Conybeare said, “The Supplemental complaint speaks for itself, and clearly shows that the Raycom deal in Hawaii is one of the most egregious violations of public trust and FCC rules in the country. These contracts are an attempt to obscure and confuse the facts, that despite denials, Raycom Media controls all three broadcast stations. Such arrogance and breach of the public trust should be met with community condemnation and FCC revocation of licenses to use the public’s airwaves.”
The agreement between the two licensees brings together Raycom’s CBS KGMB and NBC KHNL with MCG’s MNT KFVE.
MCH wrote, “KFVE is wholly dependent on Raycom for every aspect of its operation. It has only 2 employees, and even their salaries are reimbursed by Raycom. KFVE has no production facilities or production staff. The agreements show that there is absolutely no economic incentive for KFVE’s independent operation. This station has been purchased by Raycom for $22 million, plus interest and other payments.”
Raycom maintains a statement on its website explaining the relationship. President/CEO Paul McTear explained, “The purpose of a Shared Services Agreement is to not only secure the future of KHNL, K5 [KFVE] and KGMB, but to operate them more efficiently and effectively without diminishing the quality of news and other programming provided to our customers in Hawaii. We realize there may be other financial and business options available, and while we are certainly open to discussing these with any interested party, the economic reality is that this market cannot support five traditionally separated television stations, all with duplicated costs. Rather than experiencing the loss of one, or possibly two stations in Hawaii, we intend to preserve three stations that provide important and valuable local, national and international programming to viewers in Hawaii.”
RBR-TVBR observation: As we understand it, the FCC and the licensee interact over the regulatory obligations of a station, and traditionally the FCC keeps its nose completely out of programming and revenue-generating matters. That is why LMAs have always been permitted, so long as the licensee remains in ultimate control of the station.
Since the LMA practice has been condoned by the Commission for going on 20 years now, it hardly seems fair to suddenly put license revocations on the table.
The fact remains that LMAs in general and this SSA in particular are being put under the magnifying glass, if not the microscope, as part of this year’s quadrennial review.
There are arguments that can be made against them – since broadcast licenses are a precious and limited commodity, perhaps the concept of brokering them to a second party should be frowned upon at all times. On the other hand, tapping into a programming network or using the services of a sales rep is a way to turn over programming and sales functions to a second party. Where’s the line?
Some would argue that without an LMA, some stations would fail and would be forced to pull the plug. Broadcaster wannabes may hope to get a license, but how would they stay afloat as a startup when an experienced broadcaster is unable to manage the feat?
Another angle – perhaps two broadcasters in a market can team up under terms of an LMA, but isn’t that at the expense of all the other broadcasters who suddenly find themselves at a competitive disadvantage?
These are all important questions, and it’s possible for broadcasters to be on either side, although we have little doubt that most would favor keeping the LMA option open. But in no way should the licenses of these stations hang in the balance.