RBR+TVBR ANALYSIS
From the C-Suite of one of the nation’s largest TV broadcasting companies to a radio broadcasting company and radio station owners in Western Colorado and Arkansas, the news that the U.S. Supreme Court will hear oral arguments in the cases involving the FCC‘s Third Circuit remand of its media ownership rule “modernization” could be the most important news they’ve received all year.
Proposed deals forged with the understanding that the rules would stand hang in the balance. Should the Supreme Court reverse the Third Circuit remand of the rule rewrite, a host of radio and TV companies could be very pleased — signaling similar deal-making that could bring new activity to media brokers.
One of the first deals to take advantage of this rule “modernization” effort came in May 2018. Only, the company that owned the newspaper was the one to purchase the radio station. In a deal valued at $420,000, Grand Junction Media submitted paperwork with the FCC signaling its intent to purchase Class C2 KGJX-FM 101.5 — branded as “Junction 101.5” and airing an Oldies format — and three associated FM translators from Redrock Radio Group.
Grand Junction Media planned on pairing the FM and trio of individually branded translators with its Daily Sentinel newspaper.
We’re really excited about the possibilities and potential not just for this company, but for the community as well,” Grand Junction Media EVP Jay Seaton said in a Daily Sentinel news story announcing the acquisition. “It’s an exciting and unique opportunity that wasn’t available a couple of years ago,” Redrock Radio Group owner Tom Troland added.
Closing was anticipated by August 2018. However, the filing contains the following key language: IN THE INTERESTS OF FULL DISCLOSURE, THE PROPOSED ASSIGNEE IS THE OWNER OF THE GRAND JUNCTION DAILY SENTINEL, PUBLISHED IN GRAND JUNCTION, COLORADO. HOWEVER, AS THE COMMISSION HAS ABOLISHED THE NEWSPAPER/BROADCAST CROSS-OWNERSHIP RULE, THAT OWNERSHIP NO LONGER HAS ANY RELEVANCE TO THIS TRANSACTION.
It very much does as of today. And, with the Sentinel already running the operation, the Supreme Court’s decision could very well mean all stays as is — or a deal negation transpires.
Under Sentinel, KGJX shifted from syndicated personalities to local talent — a fact the NAB will most certainly approve of as an example of how cross-ownership rule revisions can benefit local communities.
RADIO GROUP SAVES A NEWS VOICE
On Sept. 17, 2019, East Arkansas Broadcasters (EAB) — the radio broadcasting company owned by Bobby Caldwell — agreed to a transaction that would bring a local newspaper back to life.
After 134 years, the Stuttgart Daily Leader in Stuttgart, Ark., published its final edition on Sept. 6, 2019.
Sensing an opportunity, EAB purchased the Daily Leader from GateHouse Media for an undisclosed price. Why would EAB want the newspaper? “We feel like adding the Daily Leader to our group of six radio stations in South Central Arkansas will be a great outlet to help us continue to provide great local news and information to the area,” COO Scott Siler explained. “We will be making plans over the next several weeks to bring the paper back in some fashion as soon as possible.”
Caldwell commented, “We are committed to strong local news, information and community involvement in all of our markets. We have operated this group of local radio stations for Stuttgart and the surrounding region since 1986 and look forward to continuing to provide the area with entertainment, news, information and great advertising outlets for many years to come. The purchase of the Stuttgart Daily Leader further solidifies this commitment.”
If the cross-ownership rules rewrite gets the Supreme Court OK, EAB could publish the Daily Leader once again. As of today, it exists only in digital form. And, that’s perfectly within the right of EAB, as the rules were written long before home internet — and a few years before the first Apple computer debuted.
The now-digital only Daily Leader is paired with Arkansas County Broadcasters-licensed Oldies KWAK-AM 1240 and FM translator K274BX at 102.7 MHz; Country KWAK-FM 105.5 “The Duck”; Country KDEW-FM 97.3; Adult Hits KVLO-FM 101.7 “Jack FM”; Country KXFE-FM 106.9; and KOTN-FM 101.5.
A print edition now rests with the SCOTUS.
A NEW BID FOR KQ2?
On April 4, 2019, one of the biggest transactions to result from the FCC’s November 2017 party-line vote to eliminate its cross-ownership rules for newspaper and broadcast media and for radio and TV, respectively, was struck.
It was certainly noteworthy, as it would have given one company control of the ABC, CBS, NBC and FOX affiliates serving St. Joseph, Mo.
Heartland Media agreed to sell ABC affiliated KQTV-2 in St. Joseph, Mo., to News-Press & Gazette Company (NPG) for $13,650,000.
Then came the Sept. 23, 2019 remand of the FCC’s rule changes by the Third Circuit Court of Appeals.
With the ruling, the ability to consummate the deal was put into question. Rather than wait for the courts to decide, Heartland Media and News-Press & Gazette in October 2019 cancelled the deal. “The transaction specified in the application is no longer being pursued,” Wiley Rein communications law attorney John Burgett wrote in a letter hand-delivered to the office of FCC Secretary Marlene Dortch requesting the dismissal of the Form 314 filing requesting Commission approval of the transaction.
Today, Heartland operates KQ2. But, it could very well wind up in NPG hands if SCOTUS says yes to the cross-ownership rule rewrite. How so? Heartland could have sold KQTV to Allen Media Broadcasting, the newly formed group headed by media executive and former Real People star Byron Allen.
In October 2019, Allen’s company agreed to purchase 11 broadcast television stations from Bob Prather-led USA Television Holdings LLC and USA Television MidAmerica Holdings LLC (collectively, USA TV) for $290 million. While Allen purchased the stations, Heartland will continue to manage the stations.
That deal didn’t include KQTV, as a deal with NPG was already in progress. It also didn’t include WKTV-2 in Utica-Rome, N.Y., the dual NBC/CBS affiliate and the dominant TV station in New York’s Mohawk Valley between Syracuse and Albany. It competes against Nexstar Media Group’s WFXV-33, which operates ABC affiliate WUTR-20 via a shared services agreement with close partner Mission Broadcasting.
With a SCOTUS OK of the cross-ownership rules, the stage could be set for not only a redo of the KQTV sale to NPG, but a sale of WKTV to Nexstar, giving it two broadcast signals and a SSA that would not be attributable to local ownership restrictions.
However things transpire is now a key focus for NAB President/CEO Gordon Smith.
In a brief statement made midday Friday, he said, the NAB looks forward to presenting its case before the Supreme Court this term. “For almost two decades, the Third Circuit Court of Appeals has blocked common-sense changes to outdated broadcast ownership regulations to the detriment of local journalism,” he said. “The time has come to allow the FCC to modernize its rules.”
