The FCC's Media Bureau has conditionally approved the sale of KYES-TV Anchorage to from Fireweed Communications to Gray Television over the objections of the American Cable Association and GCi Communications, saying that KYES meets the criteria for a waiver of local ownership restrictions that would have otherwise blocked the sale.
The Video Services division granted a failing station waiver of the FCC's duopoly rule to allow Gray to own both KYES, a MyNetworkTV affiliate and NBC affiliated KTUU Anchorage.
The condition is that for two years KYES cannot enter into an affiliation agreement that would make it a top-four station in the market in terms of audience share. that is meant to address concerns by the cable operators that a network affiliation swap could result in Gray owning two top-for stations.
The cable operators were also concerned that "Gray may tie carriage of KYES to carriage of KTUU with a resultant increase in retransmission consent fees," but the FCC declined to apply a retrans condition on the deal, saying coordinated retrans would not be out of bounds since the two stations would be co-owned.
"Pursuant to Section 103(a) of the STELA Reauthorization Act of 2014, [the retrans] rules were amended to reflect that coordinated or joint negotiations by broadcast stations in the same local market is one of several per se violations of the good faith negotiation requirement, unless such stations are under common de jure control," said the FCC. "Since KYES and KTUU would be under common de jure control following grant of the merger, any future joint negotiations that may take place within the retransmission consent context would not violate the Commission’s Rules currently in place. We have not forbidden joint negotiation by stations that are commonly owned."
The FCC also concluded that Gray was the only reasonable candidate willing to buy the stations, another key to granting a failing station waiver.
The American Cable Association last December informally joined a petition to deny Gray TV's purchase of KYES-TV Anchorage (MyNetworkTV) under the failing station waiver. Gray also bought NBC affiliate KTUU-TV there and the waiver allows it to own an otherwise disallowed duopoly in the market.
That petition was filed by Alaska cable operator GCI (which owns CBS affiliate KTVA Anchorage), Both ACA and GCI said they were troubled at the prospect of Gray being able to negotiate retransmission consent on behalf of two full-power stations in the market.
But the FCC suggested that prospect was better than letting one of the stations go under.
"We are persuaded that the Station’s [KYES] poor financial performance year after year, combined with its location and the competition already present among stronger stations in the market have resulted in a failing station that is unlikely to recover and become a viable voice in the market unless it is able to be combined with, and benefit from, the resources of a stronger station," said the Video Division. "We will not insist that the Station go dark so that it can continue to spend money it does not have in an attempt to market the Station to a buyer it may not find. The public interest is best served if the Station remains on the air."