'Trust' Us: NBCU Won't Allow Employee Sharing at KWHY

NBC Universal has taken steps to assure regulators
that if it cannot spin-off KWHY-TV Los Angeles before the Comcast/NBCU merger
closes and has to put the station in a divestiture trust, the station will be insulated
from the "influence and control" of NBCU and the two other stations
it owns in the market.

Even deal critics are looking for a decision out
of the FCC and Justice Department on the proposed Comcast/NBCU joint venture by
next month, so the move may be in case the merger tire-kickers finish their vetting
before the potential buyers have finished theirs.

NBC's amendments to the trust agreement include
prohibiting any more sharing of employees among Spanish-language KWHY and
NBC-owned  KVEA (also Spanish language) and KNBC, all in Los Angeles. NBCU
will also now use an outside appraiser to set a minimum bid price if the
station is divested out of the trust after the close of the sale.

That came in a filing with the FCC this week
in which the company said it had identified "several potential
buyers" for the station and is currently evaluating their offers. It enlisted
investment bank Moelis & Co. and the Minority Media & Telecommunications
Council to help find a buyer for the station with a particular emphasis on
minorities and women given that boosting minority media ownership would then be
an additional benefit of the Comcast deal.

NBC said back in May it would sell one of its
three L.A. stations--it chose independent Spanish-language KWHY--before closing
on its joint venture with Comcast, or barring that put the station in a
divestiture trust. NBC had originally asked the commission for a temporary,
six-month extension of its waiver of the FCC ownership rules to continue owning
three stations in the market, but then said it did not need the extra time andwould either sell it by the close or put it in the trust, Bahia Honda LLC.

NBC picked up co-located KVEA-KWHY in its purchase
of Telemundo in 2002.

In the filing, NBCU said that while the three
stations have been sharing personnel, after the closing, whatever employees are
mutually agreed upon to still be working for KWHY will no longer work for the
other two stations, and there will no longer be sharing of employees.

Employees of KWHY will be required to sign letters
agreeing to be accountable only to the trustee and are prohibited from
contacting NBC or its L.A. stations about operation or management of the
station.

The move by NBCU was in part to address criticisms
of the trust raised by Free Press, which included sharing resources among the
stations.

When NBC bought Telemundo in 2002, it agreed to
keep KWHY and KVEA's programming strategies and sales separate, which it says
it has done. But it calls the degree to which some functions and facilities are
shared outside those prohibitions "reasonable business decisions"
that do not violate the Telemundo order.

Another of Free Press's criticisms was that NBCU
would price the station too high so that it would have to be put in trust, part
of what the group called "a thinly veiled attempt to retain the station indefinitely
while stalling until such time as they can lobby the Commission to change its
duopoly rules"

While NBCU said in its filing that the allegation
was without merit, it also said was changing the trust to limit NBCU's ability
to set a minimum bid price for the station with new language that says that
price "must be consistent with the market value of the station as
established by an independent broker or appraiser."

"[T]hese amendments to the Trust Agreement,
coupled with NBCU's current efforts to divest Station KWHY, should put to rest
any lingering concerns parties may have regarding the proposal to place the
station in a divestiture trust should NBCU be unable to complete the
divestiture before closing the Comcast/NBCU Transaction."

A Free Press spokesperson was not available for
comment at press time as to whether its criticisms have been assuaged.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.