Objections to Gannett/Belo Merger Just ‘Rehash’ Old Arguments, Say Companies
Petitions asking the FCC to reject a proposed $1.5 billion deal between Gannett and Belo because it depends on shared service agreements (SSAs) are an effort to “hijack” the transaction to “advance broader policy goals,” said Gannett in an opposition comment. It was filed alongside similar ones from Belo and affiliated companies Sander Operating Co. and Tucker Operating Co. in docket 13-189 Friday. Under the terms of the Belo’s purchase by Gannett, some of the stations involved in the transaction will be transferred to Sander and Tucker but still share services with Gannett under SSAs (CD July 26 p1). The American Cable Association, Time Warner Cable and DirecTV asked the commission to deny the deal to keep retransmission consent fees down, while a host of public interest groups filed a petition arguing that the FCC should stop companies from using SSAs to get around cross-ownership rules. The petitions are a “stale and overblown rehash of policy positions” from the 2010 Quadrennial Review and the retrans proceeding, said Belo’s filing.
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The Media Bureau has rejected arguments that SSAs lead to collusion in retrans negotiations from ACA and others in several previous mergers, said Gannett. The company called them “transparent and procedurally inappropriate attempts to convert the petition to deny process into a rulemaking.” The companies involved in the deal also attacked the multichannel video programming distributors’ position on factual grounds: Gannett said allegations in the petition that some of the SSAs would authorize Gannett to represent some of the stations in Phoenix and St. Louis in retrans negotiations aren’t true. “This lack of attention to the details of the Transaction exemplifies that the MVPD Objectors care about the Transaction only insofar as they can use it as a vehicle to pursue industry-wide policy changes,” said Gannett.
It’s no surprise that Gannett, Belo and Sander and Tucker “want to be able to collude,” wrote ACA President Matt Polka in an email to us. “These broadcasters have said nothing to refute our view that the FCC should find that Gannett et al. intend to engage in the practice of coordinated retransmission consent negotiation.”
The FCC should reject the public interest groups’ joint petition because it asks for “sweeping changes to the local television ownership rules” without an administrative rulemaking process, said Sander’s filing. “Gannett will have no attributable interest in the licensees of any of the Sander or Tucker stations,” and the SSAs involved “will fall well within” FCC rules, said Belo. SSAs act as a way to avoid the cross-ownership rules, said Free Press Policy Director Matt Wood. “We're asking the FCC to close this loophole,” he said in an interview. The companies also rejected the public interest groups’ argument that the conditions of the merger are “novel,” and would require a vote by the full commission to approve. “Granting the applications is legally correct and well within the Bureau’s delegated authority,” said Gannett.
Tucker and Sander both challenged the public interest groups’ characterization of them as “shell-corporations” and argued that their executives, former Fisher Broadcasting CEO Ben Tucker and Jack Sander, a longtime vice chairman of Belo, would independently run the stations involved in the SSAs. “FCC rules require television licensees to retain decision-making authority over a station’s programming, finances, and personnel,” said Sander Operating Co. “And the Service Agreements are carefully designed to ensure that Sander retains control” over all three, the company said. “Tucker will decide how to program at least 85 percent of the station’s airtime,” and can reject programming that is “inconsistent with the interests of the Tucson community,” said Tucker’s filing.
A new, “informal objection” to the also-pending FCC approval of Media General’s purchase of Young Broadcasting was also filed Friday by Spartan-TV, licensee of WHTV(TV) Jackson, Mich., which has an SSA and joint service agreement with Young. Contrary to its own arrangements with Young, SSAs in the Media General/Young deal are being used to “destroy competitive broadcasting,” said Spartan. Young’s SSA with a station involved in the merger that shares space with Spartan, WLAJ Lansing, doesn’t involve an “independent management structure,” said Spartan. Employees at WLAJ report to supervisors at another Young-owned station, WLNS-TV Lansing, which also shares the same space, said Spartan. WLAJ’s website was also shut down after the agreement, said Spartan. The station wants the FCC to require WLAJ to be managed by the licensee and have independent supervisors. “We anticipate that [Young Broadcasting] may elect to discontinue the SSA and JSA with Spartan in retaliation for this Informal Objection,” said Spartan.