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Statehouse beat: A halt on media empires

CHARLESTON, W.Va. -- What had been a speed bump in John Raese's effort to become the king of all media in Morgantown may be turning into a brick wall.

Recall that in October, the Federal Communications Commission briefly granted, then rescinded a transfer of ownership application for Raese's radio empire to buy the only remaining truly viable competition in the Morgantown radio market, WCLG-AM and FM.

The FCC halted the process to look into a complaint filed by Joe Potter, senior vice president of IMG Sports, contending that Raese and brother David were, in part, buying the stations to prevent WCLG management from finalizing a contract to air West Virginia University sports on the stations. Potter, citing Gazette articles, also raised the issue that the company buying WCLG AM-FM, AJG Corp., is not an independent company, but a branch of Raese's West Virginia Radio Corp., created to evade FCC restrictions limiting the number of stations any one company may own in a particular market.

Industry observers figured that was merely a setback, given the FCC's historic lenience on enforcing market ownership restrictions.

However, that may have changed last week, when the FCC notified media giant Sinclair Broadcast Group that it would not approve its proposal to buy Allbritton Communications for $985 million, since Sinclair's plan to spin off TV stations in Charleston, S.C.; Birmingham, Ala.; and Harrisonburg, Pa., to so-called "sidecar" companies would violate ownership restrictions in those markets. The FCC is asking Sinclair to "amend or withdraw" its proposal.

The FCC concluded the sidecar companies are too closely aligned with Sinclair, and the arrangement would allow Sinclair to effectively operate the new stations through shared services agreements, or SSAs.

(Raese's company currently has a similar arrangement with WCLG AM-FM, called a time brokerage agreement, which from Aug. 12 to such time as the license transfer is finalized, allows WVRC/AJG to provide all programming for the stations, except for two hours on Sunday mornings.)

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Raese and his minions didn't invent the concept of setting up a shell company to evade FCC ownership restrictions -- as media watchdog FreePress notes, the big boys like Sinclair, Gannett, Nexstar, and Tribune Co. have been doing it for years, buying up stations across the country.

FreePress notes: "In some communities, one company owns two, three and even four local TV stations -- and airs the same news programming on all of these outlets. The result: an echo chamber where all the news looks and sounds the same."

(Which is why in the Charleston-Huntington market, you see the same news on Sinclair TV stations WCHS and WVAH.)

In two years, the number of stations owned or operated by Sinclair has grown from 58 to 161, including 30 owned by three shell, or sidecar, companies Sinclair has set up to get around the FCC, according to FreePress.

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Why is the FCC suddenly taking a hard look at sidecar/shell company arrangements?

A Nov. 25 letter to FCC Chairman Thomas Wheeler from Sen. Jay Rockefeller, D-W.Va. -- who ostensibly is Wheeler's boss as chairman of the Senate Commerce Committee -- may shed some light.

Rockefeller raises concerns about the current climate of broadcasting companies evading FCC market ownership restrictions, noting:

"These protections were put into place to preserve diversity of voices and localism in broadcast operations and to maintain the integrity of the nation's airwaves. In order to achieve those goals, the FCC's rules limit the number of stations an entity can own in a local market, ensuring that no single company exert dominant control of the broadcast media in that market."

Rockefeller states that he has asked the Government Accountability Office to investigate the proliferation of shared services agreements and other broadcaster coordination arrangements, "particularly in situations where assuming full ownership of a station would violate the FCC's media ownership limits."

The senator continues, "Broadcasters remain stewards of the nation's airwaves and the public's trust based on an FCC-granted license and their concurrent duty to operate in the public interest. Owners and operators of broadcast licensees must live up to those responsibilities ... I will be watching your actions closely to make sure that your review of media ownership activity properly comports with diversity, localism, and ultimately the public interest."

Pretty forceful. Not that I believe in karma, but for some reason, Raese's nasty 1984 Senate campaign against Rockefeller comes to mind ...

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Finally, the first of the expense reports for the governor's European vacation -- I mean, trade summit to Spain, France, Germany, Italy and Switzerland -- has come in.

Angela Mascia, international development office representative, reported total expenses of $12,443.70 for the 13-day mid-October trip.

That included airfare of $2,708. In addition to flights to and from the U.S., that included Paris-Dusseldorf, Dusseldorf-Frankfurt, Frankfurt-Venice, Venice-Florence, and Florence-Zurich flights.

Lodging totaled $5,471, ranging from $277 a night (U.S.) at the Hyatt Regency in Dusseldorf to $540 a night at the Paris Marriott Opera House Hotel. Meals, ground transportation and miscellaneous totaled $4,264.

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.


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