Written by Sean Vitka, Google Policy Fellow at IPR, Summer 2013
On July 24th, the Institute for Public Representation filed a Petition to Deny certain television broadcast license transfers from Belo Corporation to Gannett Company and two third-party shell companies. The Petition was filed on behalf of IPR’s clients, Free Press, NABET-CWA, TNG-CWA, National Hispanic Media Coalition, Common Cause, and Office of Communication, Inc., of the United Church of Christ. The Belo acquisition will cost Gannett $2.2 billion (one of the biggest broadcast acquisitions in recent memory), and includes roughly twenty broadcast licenses.
In five markets in particular—Phoenix, AZ; Louisville, KY; Tucson, AZ; Portland, OR; and St. Louis, MO—the Gannett-Belo combination presents serious violations of the Federal Communications Commission’s newspaper-broadcast cross-ownership rule and the local television rule. Gannett cannot own outright a television station in markets in which it already owns a newspaper or a top-four television station. Gannett is attempting to circumvent this longstanding rule by crafting “shared service agreements” and “joint sales agreements” with third-party shell corporations. These agreements allow for shell corporations to own the licenses, but in fact hand operational and, in some cases, programming control to Gannett.
These transfers are transparent attempts to avoid violation of the Commission’s media ownership rules, and Gannett should not be allowed to do so. These agreements subvert the spirit of the rules and simultaneously undermine the public interest. There is a history of shared service agreements being harmful to local stations, diversity, and competition within local markets. Following suit, these agreements will likely lead to mass layoffs at local stations, sharing and duplication of news stories, and lack of coverage of community-oriented local news in five major market areas. They also represent the first time a company has attempted to use such agreements to evade the newspaper-broadcast cross-ownership rules.
The dangers that this transaction poses to these markets are clear:
- In Phoenix, Gannett was granted a permanent waiver of the cross-ownership rule in 2008 allowing it to own the market’s only major daily newspaper, the Arizona Republic, and the NBC affiliate. Gannett would gain operational control over Belo’s two Phoenix stations, the CW and MyTV affiliates.
- In Louisville, Gannett owns the market’s only major daily newspaper, the Courier-Journal, and a weekly newspaper, Velocity. Gannett would gain operational and programming control over Belo’s Louisville station, the ABC affiliate.
- In Tucson, Gannett owns the market’s only major daily newspaper, the Arizona Daily Star. Gannett would gain operational control over Belo’s two Tucson stations, the Fox and MyTV affiliates.
- In Portland, OR, Gannett owns one of the major daily newspapers, the Statesman Journal. Gannett would gain operational and programming control over Belo’s Portland station, the NBC affiliate.
- In St. Louis, Gannett owns the NBC affiliate. Gannett would gain operational control over Belo’s St. Louis station, the CBS affiliate. Further, Gannett already provides news and operational support to the market’s ABC affiliate, giving Gannett control over three of the top-four stations in St. Louis.
Petitioners asked the full Commission to hear and decide this case because it is unprecedented and inappropriate for the Media Bureau to decide under delegated authority.
These license transfers would be destructive to the public’s need for and the Commission’s goals of diversity and competition in local news markets. IPR looks forward to the Commission’s response to our clients’ Petition to Deny. You can learn more about covert consolidation here.