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ACA, DirecTV, TWC Ask FCC To Block Part of Gannett/Belo Deal

File Petition to Deny Transfer of 5 Stations in 3 Markets They Say Raise Coordinated Retrans Concerns 7/24/2013 1:37 PM Eastern

WASHINGTON — Pay TV providers large and small Wednesday (July 25) asked the Federal Communications Commission to deny the transfer of the licenses of Belo's KMOV St. Louis; KTVK and KASW, both Phoenix; and KMSB and KTTU, both Tucson, Ariz., to Gannett — or to at least condition the shifts on disallowing coordinated carriage negotiations — according to a copy of the just-filed petition.

Those stations are part of Gannett's $2.2 billion (cash and debt) deal to buy Belo's broadcast holdings. But because they are in markets where it already owns stations and cannot own more without violating FCC local-ownership limits, Gannett is spinning them off to new owners.

Those new owners are Jack Sander, former Belo group chief, and Ben Tucker, former head of the Fisher station group. But Gannett is still identifying those stations as part of a new Gannett Super Group, and plans to get credit from Wall Street by consolidating their performance into Gannett's financial results.

July 25 was the FCC deadline for filing petitions to deny the deal. The petitioners are the American Cable Association, which represents hundreds of smaller and midsized independent operators; DirecTV; and Time Warner Cable (which joined as an "informal objector").

"If granted, the applications would create new virtual duopolies and facilitate coordinated retransmission consent negotiations in the St. Louis, Missouri; Phoenix, Arizona; and Tucson, Arizona designated market areas (DMAs)," the petition said. "As a result, Gannett — which would become the fourth-largest owner of television stations nationwide — would enjoy a significant increase in negotiating leverage based solely on its aggregation of market power. The transaction accordingly threatens to drive up retransmission consent fees (and, in tum, consumer prices) and to increase the risk and incidence of broadcast programming blackouts in these DMAs."

If the FCC does approve those transfers, the petitioners want a condition that Gannett and the assignees of the stations at issue [Sander and Tucker] refrain from coordinating negotiations for carriage on behalf of any of their non-commonly owned stations in any of such stations' markets, whether by engaging in joint carriage negotiations; each appointing the same agent to negotiate on behalf of each of the stations; negotiating separate carriage deals but sharing details of each of their carriage negotiations; sharing any details of their carriage negotiations at any time; or in any other way colluding in the negotiation of retransmission consent."

The FCC under chairman Julius Genachowski proposed making some TV-station joint sales agreements attributable under the FCC's local market caps as part of his proposed changes to ownership rules; those proposals have yet to be acted upon.

The Belo deal would swell Gannett from 23 stations to a 43-station "supergroup."

At a Senate Commerce Committee nomination hearing last month for FCC chairman-designate Tom Wheeler, who will likely be chairman by the time the agency weighs in on the petition, veteran media consolidation critic Sen. Maria Cantwell (D-Wash.) brought up the Gannett-Belo deal. She said she saw it as an effort by Gannett to "use shared-services agreements as a way to get around [FCC local ownership] rules." She said she was very concerned about the issue.

Wheeler said he understood the seriousness of the issue, but declined to comment on whether some broadcasters could abuse shared service agreements to get around the rules. "I am not informed enough to be explicit on that," he said, "but I am going to be."

Gannett was still reviewing the petition at press time.