FCC Approves Gannett/Belo and Tribune/Local TV

But signals it could be taking close look at economics of spin-offs and sharing agreements
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As expected, the FCC's Media Bureau Friday approved the mergers of Gannett with Belo and Tribune with Local TV station groups, but with a pledge to give all such deals close, case-by-case public interest inspection, and a caution that the FCC is not looking just at whether a deal does not violate its rules, but whether it is affirmatively in the public interest.

The FCC concluded for the most part that the shared services arrangements were in the public interest. But it did point out that it is also looking at "economic effects of, and incentives created by, a proposed transaction taken as a whole." That gives it room to deny spin-offs in deals involving sharing agreements, even if those do not technically violate ownership limits.

The merged Gannett/Belo will have to spin off KMOV St. Louis to an independent third party with which Gannett does not have a sharing agreements, but the other spin-offs (which all involved TV-newspaper limits in Belo markets where Gannett owns papers) are OK. Tribune and all its spin-offs, were approved. KMOV was spun off because Gannett already owns a St. Louis station and DOJ and the FCC concluded that would hurt competition for ad dollars in the market. The Tribune spin-offs were to comply with the prohibition on newspaper-broadcast crossownership.

In approving the Gannett/Belo deal, the Commission denied public interest group and MVPD petitions to deny the spinoffs. It also denied the petitions to block the Tribune deal, saying the spinoffs and shared services agreements did not represent continued control of the stations. It also said that the fact that Tribune might coordinate retrans negotiations was not a deal-breaker either.

The Belo deal involves 20 full-power TV stations in 15 markets. The Tribune deal is a $2.73 billion acquisition of 17 full power television stations from Local TV Holdings LLC

"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 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," the bureau said. "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 types of engineering and back-office support provided for in the SSAs are consistent with those we have approved in the past. We have also found that SSAs that contemplate cooperation in the negotiation of retransmission consent agreements do not inherently result in the abdication of licensee control."

Also as expected, the FCC conditioned the Tribune deal on the outcome of its UHF discount, since the deal would put Tribune over the 39% cap (about 44%) if the UHF discount were eliminated. The FCC plans to eliminate it, but also to grandfather the Tribune deal if it decides in the final order to grandfather deals announced before its September vote on the proposed rulemaking.

“In issuing these decisions, the Bureau stresses that Congress’ statutory command is that station transfers must serve the public interest, said Media Bureau Chief Bill Lake in a statement. "We remind stations and interested parties that our public interest mandate includes giving careful attention, on a case-by-case basis, to the economic effects of a transaction and its consistency with the Commission’s policies under the Act taken as a whole, including our policies in favor of competition, diversity, and localism.”   

The FCC has yet to weigh in on the two other major deals before it, Sinclair/Allbritton and Media General/Young Broadcasting, but the chairman appeared to be signaling they would be vetted under that case-by-case standard.

The commission spelling out its case for not simply signing off on deals that involved no technical violations in a couple of paragraphs (29 and 30) in the Gannett/Belo order, which it referred to in the Tribune order as well. Those paragraphs are reprinted below.

"Public Interest Petitioners stress that the Act requires a finding that a transaction serves the public interest, not merely that the transaction does not violate our rules and shares particular factual elements with other transactions previously approved relating to our attribution and control analysis. We find force to that contention. The parties to this transaction have relied on an expectation, generated by prior decisions in the broadcast context, that conformity of individual elements of the transaction to our rules and to other transactions previously approved would warrant approval here."

"At the same time, of course, Congress’ express statutory command is that license transfers must satisfy the 'public interest, convenience, and necessity,' a standard that is always informed by regulatory standards, but which necessarily involves, as our licensing decisions have long noted, the use of a “case-by-case” approach. Nor is the public-interest standard limited to the goals established by the core antitrust laws. That is why applicants and interested parties should not forget that our public interest mandate encompasses giving careful attention to the economic effects of, and incentives created by, a proposed transaction taken as a whole and its consistency with the Commission’s policies under the Act, including our policies in favor of competition, diversity, and localism."

Despite that recognition of public interest petitioners' concerns, the decisions did not sit well with some of them.

"The FCC has ignored runaway media consolidation for too long," said Craig Aaron, president and CEO, Free Press. "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."

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