FCC Defends Controversial Honolulu Triopoly but Says It’s ‘Clearly at Odds’ with Rules

The FCC’s Media Bureau defended the legality of a controversial shared services agreement involving three stations in Honolulu when it rejected a complaint last week from a local media watchdog group.

Media Council Hawaii filed a complaint in 2009 concerning the then-newly formed virtual triopoly of KHNL, KFVE, and KGMB.  Raycom Media, owner of KHNL and KFVE, had struck a deal with MCG Capital, owner of KGMB, to form an entity, now known as “Hawaii News Now,” that would effectively be run by Raycom.  As part of the complex deal, Raycom traded programming and control of MyNetworkTV-affiliate KFVE with MCG for that of CBS-affiliate KGMB–a move that basically made Raycom the owner of Honolulu’s NBC and CBS stations.

All three stations now share the same facility and Raycom produces local news programming for all of them.

At the time of the deal, Raycom and MCG did not file an application with the FCC, arguing that there wasn’t an outright change in ownership or control of a broadcast license.

Media Council Hawaii cried foul and eventually demanded that the FCC show why the three stations could legally operate together, especially considering that Raycom now controlled two of the top four stations in the market–a seemingly clear violation of FCC rules.

In its ruling (embedded below), the FCC’s Media Bureau essentially said, “Yeah, you’ve got a good point there buuut there’s nothing we can do about it right now.”

The bureau stated that “the net effect of the transactions” between Raycom and MCG “is clearly at odds with the purpose and intent of the duopoly rule.” However, the bureau, citing multiple precedents, said it would not intervene since Raycom did not acquire control of a new license in the deal–it only acquired the programming and operations of the KGMB.

In handing down the ruling, the bureau did leave room for future scrutiny: “Our decision here does not preclude us from considering whether this or similar transactions are consistent with the public interest within the context of individual licensing proceedings.”