FCC OKs Gray-Schurz Deal With Strings

Following approval by the Justice Department in December, the FCC today gave its blessing to the proposed acquisition of Schurz Communications’ TV and radio stations by Gray Television for $442.5 million.

Shortly after the deal was announced last year, Gray agreed to sell the Schurz radio stations in three deals that brought it $16 million.

In an 11-page letter released today, the FCC told Gray that it granted the applications to purchase the TV stations, granting some waivers of local ownership rules in five markets, but denying it a waiver to continue a JSA in Wichita-Hutchinson, Kan.

The FCC’s findings in the five markets:

In Wichita-Hutchinson, Kan.,Schurz owns KWCH, KSCW and three satellite stations. The FCC granted Gray’s request for a “failing station waiver” so that it could acquire KSCW and approved the takeover the satellites. However, it did not grant Gray’s request for a waiver of the JSA between KWCH and Entravision-owned KDCU.

“Although the Commission has recognized that “cooperation among stations may have public interest benefits under some circumstances, particularly in small to mid-sized markets,” it, nonetheless, concluded that “these potential benefits do not affect our assessment of whether television JSAs confer significant influence such that they should be attributed.” The FCC gave Gray “one year to terminate the KDCU-DT JSA or otherwise bring it into compliance with the commission’s rules.”

In Augusta, Ga., the FCC granted Gray’s request to continue operation of its own WRDW and Schurz’s WAGT through the incentive auction despite the ownership rule against it. “We find that the benefits of facilitating the larger transaction and encouraging participation in the broadcast incentive auction outweigh any potential harm that may result from the grant of a temporary waiver of the Duopoly Rule,” the FCC said.

The FCC also said it would not permit Gray to take WAGT off the air upon closing the Schurz transaction as it requested. “Rather, we require Gray to operate the station separately during the period of common ownership, maintaining its programming and refraining from engaging in any joint sales, including joint sales with WRDW.”

Schurz has a JSA with Media General’s WJBF. Even though Gray did not ask for a waiver to keep the JSA, the FCC said its permission to acquire WAGT is “specifically conditioned upon termination of the existing JSA with Media General [WJBF].

“Finally, following its acquisition of WAGT, we direct Gray to prepare and file an application to assign the station’s license to an independent divestiture trust, which we will process and grant, in the event that the license is not surrendered in the auction.”

In Cheyenne-Scottsbluff, Wyo., Gray owns KGWN and is seeking to acquire Schurz’s KDUH and use it as a satellite for its KNOP North Platte, Neb., and move the station into the Denver market. The FCC said that would be OK until the conclusion of the community of license change proceeding for KDUH-TV is warranted,” the FCC wrote. “During the limited duration of the waiver, the station’s programming will focus on a DMA other than the one in which the violation occurs, and the significant interest in providing viewers in western Nebraska access to television broadcast signals that originate in their State of residence — one expressly recognized by Congress far outweighs any potential harm that may be caused from joint ownership.”

In Springfield, Mo., Schurz owns KYTV and is party to various sharing agreements with Perkin Media, the licensee of KSPR Springfield, including a JSA/SSA and an option to acquire the station. Schurz also guarantees Perkin’s financing arrangements.According to the FCC, “Gray has stated that, while it will assume the non-attributable SSA upon closing the Schurz transaction, it will not assume the JSA (which will terminate), the option or the guarantee of Perkin’s indebtedness, nor will Gray, on its own, guarantee it. Furthermore, Schurz has exercised its option to acquire KSPR from Perkin, and its application for consent to assignment of the station’s license is off Public Notice and unopposed.” The commission said that “the parties have committed to steps that would result in their compliance with the commission’s multiple ownership rules.”

In Rapid City, S.D.: Gray has assigned to Legacy Broadcasting its rights to acquire KHME (formerly KOTA), Rapid City, and its full-power satellite station KHSD Lead, S.D., from Schurz.

“Legacy has provided information sufficient to warrant continued satellite operation for KHSD…. Given the station’s long history as a satellite, the geographically challenging nature of the market, lack of access to compelling programming, and insufficient advertising revenues to support ongoing operational costs, it is unlikely that an alternative operator would be willing and able to operate the station as a stand-alone facility.  Accordingly, we find that the continued operation of KHSD as a satellite of KHME would serve the public interest.”

Read the FCC’s full letter here.