UPDATED AT 4:25 P.M.

FCC OKs Gannett-Belo And Tribune-Local

The commission on Friday gave the green light to the $1.5 billion Gannett buy of Belo's 20 stations (minus KMOV St. Louis, which it is spinning off) as well as the $2.7 billion purchase by Tribune Co. of Local TV LLC’s 16 stations. Gannett says it expects to close its deal next week.

At the end of a year filled by big-ticket TV station mergers and acquisitions, the FCC today cleared the way for two of the year’s bigger deals.

It approved Gannett Co.’s $1.5 billion acquisition of Belo Corp. that was announced in June. The original deal was for Belo’s 20 stations in 15 markets (Gannett’s current portfolio contains 23 stations), but on Monday that 20 was reduced to 19 when Gannett agreed to address Justice Department concerns by agreeing to completely spin off Belo’s CBS affiliate KMOV St. Louis (Gannett already owns KSDK, the market’s NBC affiliate), rather than sell it to a “sidecar” company, Sander Media, headed by a former Belo executive.

“Gannett’s KSDK and Belo’s KMOV compete head to head in the sale of broadcast television spot advertising in the St. Louis area, and this rivalry constrains advertising rates,” William J. Baer, Justice’s antitrust chief, said in a statement.

Gannett said it expects the deal to close early next week.

The commission also OK’d Tribune Co.’s purchase of 16 stations in 14 markets from Local TV LLC for $2.7 billion. That deal was announced in July and when it closes, Tribune says, it will be “the largest combined independent broadcast group and content creator in the country.”

Peter Liguori, Tribune’s president-CEO, said in a statement: “The logic and investment thesis underlining our acquisition of Local TV is as powerful as it is simple—in a fragmenting media landscape, there is value in scale, for our viewers, advertisers, networks, cable and satellite partners and, most important, the communities we serve.”

BRAND CONNECTIONS

In granting the Gannett-Belo merger, the FCC tossed out petitions to deny from two groups — one representing foes of media consolidation, the other from cable and satellite interests, including Time Warner Cable and DirecTV.

The target of the petitioners were two companies that Gannett set up to own seven of the Belo stations in five markets where it could not own them outright because of two FCC rules — the local ownership rule limiting the number of stations a broadcaster may own in a single market and the newspaper-broadcast crossownership rule banning the common ownership of a daily newspapers and a TV station in the same market.

One of the so-called sidecar companies, Tucker Operating Co., ends up owning one of the stations, while the other, Sander Operating Co., ends up with five. Tucker is owned by former broadcasting executive Ben Tucker; Sander, by former Belo executive, Jack Sander.

However, in each case, Gannett remains heavily involved in the operation of the Tucker and Sander stations through shared services agreements, joint sales agreements or both.

Sander acquires one station in Phoenix, where Gannett owns the Arizona Republic and KPNX; two stations in St. Louis, where Gannett owns KSDK; one station in Portland, Ore., where Gannett owns the Statesman Journal; one station in Louisville, Ky.; where Gannett owns The Courier Journal; and one station in Tucson, Ariz.; where Gannett owns the Tucson Citizen and the Arizona Daily Star.

As noted above, Gannett and Sander have agreed to spin off one of the St. Louis stations, KMOV, to appease antitrust regulators at the Justice Department. So, Sander nets just five stations rather than six as originally planned.

Tucker’s one station is also in Tucson, where Belo had two. Sander gets KMSB, while Tucker gets KTTU.

Although the anti-consolidation petitioners  objected to the contractual arrangements between Gannett and Sander and Tucker, the FCC found no fault with them.

“The commission has approved applications for consent to television station transactions involving a combination of joint sales agreements, other types of shared services agreements,options and similar contingent interests, and guarantees of third-party debt financing, and has found these cooperative arrangements not to rise to the level of an attributable interest,” the FCC said.

“We find the combination of interests presented here falls within those combinations previously approved.”

The FCC was no more sympathetic to Time Warner Cable and DirecTV, which complained that Gannett and its sidecar companies would jointly negotiate for retransmission consent fees and reduce the operators bargaining power.

The FCC said that the retrans issue is the focus of another rulemaking. “We decline to address in this licensing order an issue posed in that proceeding, at the behest of parties that petitioned to commence it.

“Aside from the issue of joint negotiation of retransmission consent agreements, [they] fail to demonstrate that the proposed assignments and related cooperative agreements violate our rules or our policies as embodied in precedent.”

In giving its blessing to the Tribune-Local TV LLC deal, the FCC Media Bureau rejected a petition to deny a side deal under which Tribune  is spinning off three stations to Dreamcatcher Broadcasting to comply with the newspaper-broadcast crossownership rule.

The petition was filed by Free Press and other groups that believe the FCC has allowed far too much consolidation in the broadcasting ranks.

However, the FCC agreed to condition the entire transaction on Tribune coming into compliance with any changes to the national ownership cap. The FCC is currently considering tightening that cap in a separate proceeding.

The Local TV group includes WNEP Scranton, Pa., and WTKR-WGNT Norfolk-Portsmouth-Newport News, Va.

Because Tribune owns the Allentown [Pa.] Morning Call and the Norfolk Daily Press, Tribune’s outright ownership of WNEP and WTKR-WGNT in the same markets would put it in violation of the crossownership rule.

To comply with the rule, Tribune proposed spinning off the three stations to Dreamcatcher, a company owned by former Tribune executive Ed Wilson.

In opposing the deal, the Free Press petitioners argued the spin off was a sham, that Tribune would operate the stations as if it owned them outright under a shared services agreement.

Under that SSA, Tribune will provide technical, promotional, payroll and other back-offices services; assist in the negotiating retransmission consent fees; and program no more than 15% of the station’s air time.

After sizing up the SSA, the FCC found no cause to interfere with the sale.

“We disagree with petitioners that the facts here show that Tribune will be operating the Dreamcatcher stations as though it owned them outright. Dreamcatcher will be run by a highly experienced broadcaster, with established independence from Tribune.

“We do not find anything suspect in the fact that, several years ago, he [Wilson] was associated with the company. Tribune is only one of several broadcasters with whom he has held senior positions and he has not been employed by Tribune for three years.

“When looking at the terms of the SSAs themselves, we find them consistent with our precedent. The programming limits in the SSAs are consistent with those that have been approved in similar arrangements for over a decade.”

The FCC was not as accommodating on the question of the national cap that limits the coverage of groups to no more than 39% of all TV homes.

Under the current method of calculating the reach of groups, in which the coverage of UHF stations is reduced by half, the reach of Tribune and Local TV combined is 27%.

But the petitioners pointed out that that FCC has a rulemaking aimed at eliminating the UHF discount, and that without the discount, the Tribune-Local TV reach would swell to 44%, well over the cap.

The FCC was not prepared to block the deal because of the 44%, but said that Tribune would have to comply eventually with the outcome of the UHF discount rulemaking.

Free Press President Craig Aaron was not happy with the FCC actions. “The FCC has ignored runaway media consolidation for too long,” he said. “There was no good reason to let that trend continue with these mega-mergers. These kinds of deals shutter newsrooms and silence competing viewpoints, harming local service, diversity and competition in media markets across the country.

“Gannett and Tribune use shell companies, shady arrangements and accounting tricks to keep total control over broadcast licenses they can’t hold in their own names.  They brag to investors and Wall Street analysts about how they can dodge the FCC’s cross-ownership limits and get away with it.

“This fiction hasn’t fooled other government agencies. The DOJ recognized that Gannett and other big broadcasters are really in control of their so-called sidecar companies, and the Securities and Exchange Commission sees that the big station groups control the shells’ finances and day-to-day operations.

“The FCC needs to scrutinize the use of shell companies and sharing agreements in general, and should reconsider and review these deals too.  It needs to fix its rules now, and throw out the rubber stamp that’s making America’s media system less local, less diverse and less accountable to the people in hundreds of communities.

“It’s time for the agency to tighten its rules, close these loopholes and start promoting local journalism and real news.”


Comments (24)

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Alan Whitney says:

December 20, 2013 at 4:10 pm

A big blow to local news viewers and a win for big media corporations.

    Wagner Pereira says:

    December 20, 2013 at 7:52 pm

    Comical to see people posting BS like this. As people who live in reality know, most of the revenue (and profit) for local stations are made around local news programming. As thus, big money is poured into these operations to make sure they are competitive. And on the very same day in which those who have never seen the numbers from a true operation, another TVNewscheck story tells of Northern Colorado 5 out of Ft. Collins being shut down beause, as quoted in the story, “Despite the efforts of many great people and an investment over the past five years, NoCo5 concluded that it could no longer effectively serve the Northern Colorado area,” said station manager Tregg White. “We regret that all their efforts and all of our investments were simply insufficient to make this hyper-regional station a viable long-term operation…” . Clearly, money is put into the big operations (Gannett is #1 in Denver) and the local ownership COULD NOT COMPETE.

    Teri Green says:

    December 20, 2013 at 11:05 pm

    Wrong. If this were the case duopolies like WPWR Chicago and WWOR would be swimming in news, which of course they aren’t.

    Wagner Pereira says:

    December 21, 2013 at 1:47 pm

    Independents have different revenue structure than Network Stations which is where the story you commented on is rooted. Not Indies.

Angie McClimon says:

December 20, 2013 at 4:23 pm

Why spend money to compete when you can spend it absorbing your competition?

Monica Alba says:

December 20, 2013 at 4:51 pm

Deregulation of radio (then TV) DESTROYED the quality of service, accountability, and localism! ClearChannel (“Tribune TV”… same people) proved this. My BIGGEST beef with this is that Tribune HOSED investors/employee-owners/vendors out of their money on the bankruptcy just a few years ago. WHY (ignoring the very obvious reason of politicians being in their pockets) are big businesses allowed to hose investors through bankruptcy, only to come out with “plenty of money to buy new shiny toys” after “the bankruptcy dust settles”??!! Look at Kmart who filed, hosed hundreds of thousands of “regular joe investors”, then almost immediately purchased Sears (and destroyed that brand and the Craftsman line by putting it in their crappy Kmart stores)! So Tribune hoses retirees and investors and is REWARDED with the purchase of it’s “shadow” LocalTV company (which was RUN by Tribune buy “hidden in plain sight” during bankruptcy as it was “sheltered” by the LLC part. This MUST stop!! Big business SHOULD have a financial liability for at least 10 years to investors upon filing bankruptcy. As was said (as a former employee) to me during the bankruptcy… “We’re making as much or more than we EVER did.. but now we have none of the past bills!” That is immoral behavior!! CEO’s, CFO’s, etc. may “claim” that “it’s the company”… but YOU, as the leadership, and the BOARD of the company are unscrupulous, unethical, and immoral based on your actions in business. YOU are only as good as your word (as a company, AND as the individuals who run it)!

    Wagner Pereira says:

    December 20, 2013 at 7:56 pm

    Local TV was up and running long before Tribune was sold. It had nothing to do with Tribune assetts. In fact, it paid fees to Tribune for operational support. Without that, the loss at Tribune would have been worse. Please get your facts correct. If you want to be first in line at time of Bankruptcy, then loan them money to get to the front of the line. If you do not understand what INVESTOR means and what legal rights it gives you, you should not INVEST.

    Teri Green says:

    December 20, 2013 at 11:09 pm

    Local TV was formed in Dec 2006, Zell said he’d buy the Trib in April 2007 just four or five months later. How is that “Long before”??? A year later in 2007 Zell and Local TV already made their first deal. Do you think they honestly didn’t have some collusion before hand? Perhaps not, but I wouldn’t bet the farm on it.

    Wagner Pereira says:

    December 21, 2013 at 2:03 pm

    Local TV announced the purchase of the 9 NETWORK Stations of the NYT Company in December 2006. Zell did not take control of Tribune until a little over a year later, on 12/20/2007. At the time, Local TV had a deal in place to acquire 8 Fox O&O stations which was announced 2 days later. Zell did not even announce a deal to buy Tribune until April 2007 which after Local TV had been formed and announced their first deal the previous year. Tribune was paid a fee by Local TV for the operation of it’s TV Stations. If this had not had taken place, Tribune would have lost even more money and would have been in worse shape. Bottom line is the Economy/Recession killed the Tribune you are speaking of. When your revenue depends on Advertising and it gets pulled out from under you, there is no doubt a collapse will happen.

    Brian Bussey says:

    December 23, 2013 at 10:58 am

    I thought Trib was broke also.

    Wagner Pereira says:

    December 24, 2013 at 3:17 am

    You can be broke owing $100 or broke owing $1 Billion Dollars. Just ask Enron. Those in deep debt sell off all their assets while those who manageable debt restructure and continue operation.

Just Fine says:

December 20, 2013 at 5:03 pm

I’m in a market affected by both acquisitions. WVEC’s now Gannett-owned, and I have no qualms with that. That whole Dreamcatcher situation with WTKR/WGNT is weird. Why sell it to someone with ties to the company that bought the channels instead of an actual third party like Media General, Raycom, Lockwood, or Meredith (I would have said LIN or Sinclair, but in my market, they own multiple channels already)? It seems like a shell company that could easily sell the networks to Tribune when circumstances change.

Shenee Howard says:

December 20, 2013 at 5:53 pm

Clear Channel has ruined local radio. It is all voice tracked and from city to city, it all sounds the same. If TV migrates to the same model, we are all doomed and the networks should just operate all TV broadcasting. Unfortunately, it does not seem the FCC or Justice Dept. care about localization of media anymore.

    Wagner Pereira says:

    December 20, 2013 at 7:59 pm

    Obviously Network TV will look the same. As noted earlier, most stations make their money with their local news product. Rather hard to do that in a cookie cutter format across a swath of stations. As thus, stations will still look for ways (and spend money) to max out their local news ratings.

Joanne McDonald says:

December 20, 2013 at 8:42 pm

Gannett sells KMOV to Meredith and also sells KASW to form a duopoly with KPHO in Phoenix to Meredith while selling KTVK to regain the ABC affiliation and form a duopoly with KNXV in Phoenix and WHAS to Scripps. Involved in a trading and swapping deal with Sinclair in which Sinclair gains KMSB/KTTU while Gannett gains WUCW to from a duopoly with KARE in Minneapolis-Saint Paul, KDNL to from a legal virtual duopoly with KSDK as a way for KDNL to have a relationship for having a news operation at KDNL in Saint Louis, and WTTA to from a duopoly with WTSP in Tampa-Saint Petersburg. Involved in a trading and swapping deal with Tribune in which Tribune gains KGW to from a duopoly with KRCW while Gannett gains KDAF to form a duopoly with WFAA in Dallas-Fort Worth, KIAH to form a duopoly with KHOU in Houston, KFOR/KAUT, KFSM/KXNW, WTVR, and WDCW to form a duopoly with WUSA in Washington, DC.
Involved in a trading and swapping deal with Media General in which Media General gains WREG, WGHP and WTKR/WGNT while Tribune gains KRON. Involved in a trading and swapping deal with LIN Media in which LIN Media gains WHNT while Tribune gains WLUK/WCWF. Involved in a trading and swapping deal with FOX in which FOX gains WPHL while Tribune gains WHBQ.

    Wagner Pereira says:

    December 20, 2013 at 10:03 pm

    Again, no one cares what you think.

Sean Smith says:

December 22, 2013 at 12:11 am

I was waiting to see what ridiculous comments James Cieloha would be making, and of course, I’m not disappointed. TO ANYONE WHO HAS NOT READ HIM BEFORE: Whenever there is a station sale somewhere, James Cieloha gets on his keyboard and bangs out the most outrageous, lunatic suggestions that anybody has ever made. He is a very lonely man (or child), that has no idea how television works. Worse yet.. he knows that with his stupid comments, he aggravates everybody else with knowledge of the industry,.. that’s why he keeps doing it. So, allow me to once again as I always do, set him straight:
Gannett is not selling KMOV to Merideth and also does not sell KASW to form a duopoly with Phoenix to Meredith, while not selling KTVK to regain the ABC affiliation and not form a duopoly with KNXV in Phoenix, and WHAS not to Scripts. Nobody will be in a trading and swapping deal with Sincliair in which Sinclair DOES NOT GAIN KMSB/KTTU, while Gannett DOES NOT gain WUCW and DOES NOT FORM a duopoly with KARE in Minneapolis-St Paul, not KDNL to NOT form a legal virtual dupolocy with KSDK as a way for KDNL to NOT have relationship for NOT having a news opeation at KDNL in St. Louis and WTTA to NOT from a dupopoly with WTSP in Tampa-St. Petersburg, which is NOT involved in a trading and swapping deal with Tribune in which Tribune DOES NOT GAIN kgw TO NOT from a duopoly with WRCW, while Gannett DOES NOT gain KDAF to NOT FORM a duopoly with WFAA in Dallas-Forth Worth, KIAH to NOT form a duopoly with KHOU in Houston, KFOR-KAUT, KFSM/KXNW, WTVR and WDCW to NOT form a duopoly with WUSA in Washington DC, NOT involved in a trading and swapping deal with Media General in which Media General DOES NOT gain WREC, WGHP and WTKR/WGNT, which Tribune DOES NOT gain KRON. NOT INVOLVED in a trading and swapping deal with LIN Media, in which LIN Media DOES NOT GAIN WHNT, which Tribune DOES NOT GAIN WLUKL/WCWF. NOT involved in a trading and swapping with FOX in which Fox DOES NOT GAIN WPHL while Tribune DOES NOT gain WHBQ.
Now that I have undid all Cieloha’s diarrhea of the keyboard, everybody can continue reading VALID comments.

    kendra campbell says:

    December 22, 2013 at 8:00 am

    Why does your post look and feel exactly like Cieloha’s?

    Linda Stewart says:

    December 22, 2013 at 9:36 am

    Let’s cool it will the personal attacks.

    Joanne McDonald says:

    December 22, 2013 at 6:29 pm

    I would rather see more diversity over less diversity in newsroom operations and newsroom reporting.

    Maria Black says:

    December 23, 2013 at 9:05 am

    If you want to see that, get on your local stations and others to stop using AP stories and scripts for 75% of their newscast. Ownership isn’t the answer to that. News anchors today just read a ‘prompter and get their hair done, no one goes out and does anything anymore. I’ve seen my local morning show hosts out at various local events, filming a segment or two for their shows, but who is doing the interview? Some guy who I’ve never seen on TV, who is hanging out with the camera guy.

    Brian Bussey says:

    December 23, 2013 at 11:03 am

    newsroom diversity would distroy plutocrats running this country. it will never happen.

    Wagner Pereira says:

    December 23, 2013 at 1:02 pm

    Considering these comments have nothing to do with the story, but is James Cieloha playing a Sims Game with no regard to the real world, if his predictions are so important to TVNewscheck, then perhaps you can give him a blog where he can share his knowledge with everyone who wants it instead of constantly posting off / speculative topic comments. Just think of all the CEO/COO’s that will then rush to TVNewscheck to read his blog about how they should spin their assets! You could even charge a fee for insight! Imagine how TV Suppliers would rush to Advertise on the James Ciehola blog knowing all the CEOs/COOs are reading his blog and using it as an operational guide for their business! MultiChannel News would be jealous that TVNEWSCHECK got James Ciehola’s blog! Otherwise, you need to put in an IGNORE function so all the real readers looking for relevant comments on the reality of in the story will not be subject to reading his fantasy world.

Brian Bussey says:

December 23, 2013 at 11:06 am

lets face the elephant in the room. Belo was overrated as “THE” primary news source in Texas. Go back and look at the President Obama interview with that psycho from the Dallas Morning News.


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