Washington

FCC Approves Gray-Schurz TV Station Deal

Requires unwinding of some JSAs; WAGT stays on air 2/12/2016 12:25:00 PM Eastern

The FCC has approved Gray's purchase of 15 Schurz TV stations, granting the applications to transfer the licenses in a complicated 11-page decision that includes waivers of duopoly rules, divestitures and the unwinding of JSAs. The FCC will also require one station to stay on the air during the incentive auction even though the parties had agreed to take it off to avoid duopoly issues.

With those waivers, partial waivers and the rest, the FCC concluded the deal was in the public interest.

The Justice Department signaled late last year it had no competition issues with the deal and the FCC informed the parties of its decision in a letter Friday, a copy of which was obtained by B&C.

Among the complicated deals complications was in Augusta, Ga., where Gray owns CBS affiliate WRDW-TV and Schurz owns WAGT, the NBC affiliate. They are both among the top four stations in the market and thus would violate FCC duopoly rules.

Gray knew it had to divest one of them, and has said it intends to offer WAGT's spectrum in the incentive auction. But since the auction won't be concluded until later this year, and there is no guarantee Gray will be the winning bidder in Augusta, Gray requested a temporary waiver of the duopoly rule to allow joint ownership until the auction was completed, but to take WAGT off the air after the deal was approved so that it would not actually be operating two top-four stations during the waiver period.

The FCC granted the temporary waiver, saying 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 permitting joint ownership of WRDW-TV and WAGT for the duration of the auction." But the FCC said it won't let Gray take WAGT off the air. "[R]ather," said the FCC, "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-TV.

WAGT currently has a JSA with Media General that Gray said would be terminated at the deal's close, but the FCC went beyond that, making such termination a condition of the deal.

The FCC did not agree to waive its joint sales agreement attribution rules for the JSA between KWCH-DT and KDCU-DT, as the parties had asked. That combination would violate the FCC's duopoly rules in light of the March 2014 decision to make such JSAs attributable as ownership interests.

The FCC instead gave it a temporary waiver and a year to terminate the JSA or otherwise come into compliance with the rules.

The deal is also contingent on Gray's unwinding of a JSA between Shurz's KYTV(TV) Springfield, Mo., and Perkin Media's KSPR. Gray said it plans to assume a nonattributable shared services agreement between the two stations, but would terminate the JSA with Perkin, which Schurz is buying.

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