Media Council Hawaii Asks FCC to Block Raycom/MCG Shared Service Agreement

Group says shared services partnership would do "imminent" harm to viewers

By John Eggerton -- Broadcasting & Cable, 10/7/2009 5:21:17 PM

Public Interest Group Media Council Hawaii is asking the FCC to block Raycom and MCG Capital's shared service agreement, in which Raycom, which owns NBC affiliate KHNL and MyNetworkTV affiliate KFVE would also operate CBS affiliate KGMB, owned by MCG.

In a filing with the FCC to be announced later today in Hawaii, the group asks the FCC to enjoin the two companies from executing the agreement later this month, saying it would do "imminent" harm to viewers "through its negative impact on diversity and competition."

Last month, Raycom and KGMB owner MCG Capital announced their agreement to work together. About a third of the employees at the three stations stood to lose jobs, according to published reports. "The economic reality is that this market cannot support five traditionally separated television stations, all with duplicated costs," Raycom CEO Paul McTear said at the time. "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."

But Media Council Hawaii, which calls itself "a non-partisan, non-profit, nongovernmental independent group that seeks to improve public access to information," says the agreement, because it allows Raycom to control the local news, personnel and finances of the three stations, is the equivalent of a transfer of license that violates FCC local TV ownership rules.

The FCC's rules prevent ownership of more than two of the top four stations in a market or owning three stations in a market. But it does not disallow shared services deals among multiple stations so long as they meet the following conditions, according to a veteran communications attorney. The original licensee, in this case MCG, must control at least 85% of the programming, still have at least two employees, benefit economically from any improvements to the station's performance by virtue of the agreement, and control decisions about programming, personnel and finances.

The Media Council Hawaii says that Common Cause Hawaii and the Society for Professional Journalists support their efforts to block the agreement.