Gannett/Belo and Tribune/Local Approved by Media Bureau

Gannett’s $2.73 billion purchase of Belo and Tribune’s $2.2 billion purchase of Local TV were approved by the FCC Media Bureau, according to a pair of orders released Friday (http://bit.ly/1ds4aFD) and (http://bit.ly/1cGP7WV). That was as expected (CD Dec 19 p1). Though cable companies and public interest groups had filed oppositions to both transactions, bureau Chief Bill Lake said in an email to us that the agency had considered both deals in terms of their effect on the public interest. “Our public interest mandate encompasses giving careful attention to the economic effects of, and incentives created by, a proposed transaction taken as a whole and its consistency with the Commission’s policies,” said the bureau in the Gannett/Belo order. Free Press, which along with other public interest groups had opposed both deals, said it was “disappointed” by the decisions. The FCC “needs to fix its rules now, and throw out the rubber stamp that’s making America’s media system less local, less diverse and less accountable to the people in hundreds of communities,” said Free Press President Craig Aaron in a release.

The approval of the transactions at the bureau level suggests deals using sharing agreements in compliance with FCC ownership rules won’t have a problem making it through the regulatory process, said Drinker Biddle broadcast attorney Howard Liberman in an interview. “So far, it’s business as usual.” I n the order approving Gannett/Belo, the bureau points out that though public interest groups object to the transaction, their filings acknowledge the bureau has approved more extensive sharing arrangements than those in this transaction. “We find the combination of interests presented here falls within those combinations previously approved,” said the order. Since Gannett/Belo and Tribune/Local are approved with sharing arrangements, it’s likely other companies will be confident proposing such transactions going forward, said an analyst.

Bureau orders and Lake said that transactions are judged against the public interest on a “case-by-case” basis. The bureau’s focus on the public interest standard is a “warning flare” to broadcasters that “going forward broadcasters should no longer simply rely on an expectation that conformity of the elements of the transaction to the FCC’s rules and to other transactions previously approved alone will warrant approval,” said the American Cable Association in a news release. ACA had objected to Gannett/Belo on grounds it would encourage broadcaster collusion in retransmission consent negotiations (CD Aug 12 p9). Those objections belong in the context of the FCC’s greater retrans rulemaking proceedings, the bureau said.

The approval of the Gannett transaction “makes it harder on the full Commission to do a clean review of the media ownership rules next year,” said United Church of Christ Policy Adviser Cheryl Leanza, who filed an opposition to the transaction. The deal has created “another large corporate entity seeking to grandfather existing business arrangements that circumvent the FCC’s rules,” she said in an email. The transaction increases the urgency of “a serious media ownership quadrennial review,” Leanza said.

The Gannett/Belo order doesn’t impose additional conditions on the deal beyond the divestiture of KMOV St. Louis required by a Department of Justice consent decree issued Dec. 16 (CD Dec 17 p6). The deal will leave five stations controlled by Gannett-affiliated company Sander and one controlled by Gannett-affiliated company Tucker Media, while 13 stations remain with Belo, which will become a subsidiary of Gannett, the bureau order said.

Tribune/Local is conditioned on Tribune coming into compliance with the ongoing FCC rulemaking proceeding involving the possible elimination of the UHF discount. The deal has been expected to leave Tribune above the 39 percent national ownership cap if the discount is eliminated, but the grandfathering rules proposed in the NPRM would allow Tribune to be grandfathered in under the old calculation. The deal involves 19 stations, with stations in Norfolk and Portsmouth, Va., and Scranton, Pa., to be transferred to Tribune-affiliated company Dreamcatcher and operated through sharing agreements, the bureau’s order said.

The Tribune/Local creates “the largest combined independent broadcast group and content creator in the country,” said Tribune in news release (http://bit.ly/1gLmCyB). “In a fragmenting media landscape, there is value in scale, for our viewers, advertisers, networks, cable and satellite partners and, most important, the communities we serve,” said CEO Peter Liguori. Tribune didn’t comment on when its transaction would close. All regulatory approvals for the Gannett/Belo transaction have been received, Gannett said in a news release (http://bit.ly/1etVCTQ). “Closing is expected early next week upon completion of remaining customary closing conditions.”