Did Raycom Buy KGMB Honolulu?
Raycom kicked in $22 million as part of its deal to run KGMB in Honolulu, reports the Honolulu Star-Bulletin. Pesky reporter Erika Engle went over the SEC filing and said it appears that $22 million went from Raycom to KGMB owner MCG Capital.
Does that make it a sale, or, as Raycom boss Paul McTear has said, an asset exchange?
A sale would require regulatory approval and would certainly give ammunition to the local watchdog groups who’ve been looking to put the kibosh on the deal, saying it decreases the number of voices in the Honolulu media.
Engle writes:
MCG’s SEC filing said it completed an asset-exchange transaction with Raycom on Oct. 26.
As part of a deal dated Oct. 16, MCG exchanged with Raycom certain assets used in the operation of MCG’s KGMB-TV “in return for a $22.0 million note, with current pay interest,” as well as programming assets used in the operation of K5.
Also on Oct. 26, it entered into a shared services agreement with Raycom in which Raycom is providing services to K5, the Wednesday filing said.
And then:
The $22 million was not mentioned by Raycom President and Chief Executive Officer Paul McTear during an Aug. 18 news conference announcing the TV stations’ deal.
Rather, he said, “there’s no cash being exchanged. Assets are being exchanged.”
At a Star-Bulletin editorial board meeting later that day, he said, “I’m not paying anybody. There is no money changing hands at closing.”
Onlythefacts commented:
Lets face it and address the 1000 lb. gorilla in the room. Unless the sales sides of these businesses (the advertising departments) are kept totally seperate. No sharing of sales management etc., there are major issues with anti-trust and collusion. I can see how they can pull off shared news resources but the line is definately crossed when the advertising side is affected. Someone, i believe the FCC will put the breaks on it.
Rick daysog commented:
Mike, I think Erika only heard about this story after I published it in the Advertiser the day before. See: osted on: Friday, November 6, 2009
KGMB owner to get $22M from Raycom
Critics say arrangement proves that newsroom merger was actually a sale