June 17-23 | Your News & Comments: Part 2

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FCC chair nominee punts on Belo deal questions

At a U.S. Senate hearing yesterday, President Obama's nominee to lead the Federal Communications Commission declined to comment on whether Gannett and other companies were skirting FCC regulations on ownership of multiple media outlets in the same market.

Wheeler

The nominee, Tom Wheeler, was responding to remarks by Sen. Maria Cantwell, D-Wash., who criticized GCI over its proposal to buy 20 Belo stations, including three in Washington State, according to trade publication Broadcasting & Cable.

FCC local market caps prevent GCI from retaining ownership of Belo stations in five markets where it already owns a station or a newspaper. Those will be owned by a third party led by former Belo executive Jack Sander. But GCI has said it will provide some back office services for the Sander stations.

The $2.2 billion Belo deal announced last week can't proceed without an OK from the FCC and other regulatory agencies.

At the hearing, Wheeler, 67, said he understood the seriousness of the issue, and said he's been a longtime advocate of diversity of voices. He said the FCC has asked GAO to study the issue and he "looked forward to their opinion," Broadcasting & Cable says.

He said the key is for the commission to look at competition, localism and diversity as the touchstones, not business plans. He 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."

Obama nominated Wheeler, a telecom investor, on May 1.

June 17-23 | Your News & Comments: Part 1

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Here's a copy of the $2.2B merger agreement

It was filed late this afternoon as part of this notice with the U.S. Securities and Exchange Commission and, like all such documents, it's groaning with boilerplate legalize.

That said, Belo Corp. employees will be especially interested in the section starting on Page 44 under the heading "Employee Benefits Matters."

Shive

Also, I noticed on Page 48 that Gannett can request that Belo get its officers and directors to resign prior to completion of the merger. Under those circumstances, Belo CEO Dunia Shive would be entitled to a severance package of about $8 million, according to the company's most recent proxy report to shareholders.

Of course, that's chump change compared to the $46.4 million CEO Gracia Martore would get if GCI were swallowed by another company. But Shive got paid just $3.6 million last year vs. Martore's $8.5 million.

And for those who may be wondering, Belo is obligated to pay GCI a $51.5 million termination fee if it backs out of the deal. Announced last week, it is valued at $2.2 billion including assumption of debt.

Earlier: How the Teamsters nearly beat GCI on takeover severance benefits.

Belo units in St. Louis, Phoenix to stay independent

KMOV-TV in St. Louis and KTVK in Phoenix will compete head on with Gannett's existing stations in those two cities when GCI completes its $2.2 billion acquisition of Belo Corp. later this year, according to a published report today.

In three other cities -- Louisville, Ky.; Portland, Ore., and Tucson, Ariz. -- Belo stations in the deal will also be spun off to a third party. But GCI will have more of a hand in their operation through a shared services contract, according to the report in Media Bistro's TVSpy.

Sander

In announcing the acquisition plans last week, Corporate told GCI employees that five of the 20 Belo stations in the deal would be owned by the as-yet-unnamed third party. Jack Sander, a senior advisor to Belo, will lead that entity, Broadcasting Division President Dave Lougee told TVSpy.

Lougee's remarks clarified how GCI and Belo will satisfy any regulatory concerns about maintaining competition in those markets where GCI already has a presence. Federal Communications Commission regulations generally prohibit investors from owning more than one station per market, or a station and a newspaper in the same market.

In St. Louis and Phoenix, GCI already owns KSDK and KPNX, respectively. In Louisville, it owns The Courier-Journal. In Tucson, it publishes The Arizona Star with Lee Enterprises. And in Salem, Ore., near Portland, it owns the Statesman Journal.

Sports Media | Tip: more staff cuts in BNQT unit

The USA Today Sports Media Group has laid off a handful of employees in its action sports subsidiary, BNQT, according to one of my readers. Some senior business development and management staff also have been let go, this reader says.

What have you heard? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

As GCI expands further into TV, new online threats

The traditional broadcasting model took a fresh hit this morning: Netflix announced another original programming deal.

The company, best known for renting videos, said it will carry a new series based on DreamWorks Animation franchises, with the first series expected to debut in 2014. Netflix is already set to debut a new DreamWorks Animation series, Turbo F.A.S.T., this fall, according to MarketWatch.

Netflix shares, already on a tear, rose 6% this morning to $229.

Online streaming companies such as Netflix, Amazon and Hulu, and even chipmaker Intel, are spending heavily on content as they fight for a piece of the fast-growing market for movies and TV shows delivered over the Internet, according to Reuters.

Netflix, the industry's pioneer, is counting on winning new subscribers by offering original series such as the Kevin Spacey drama House of Cards.

In addition, the company brought back the cult TV comedy series Arrested Development in May and allowed viewers to see each 15-episode in one sitting, harnessing the trend of viewers binge-watching TV series online and through DVDs.

Last week, Gannett said it would pay $2.2 billion, including the assumption of debt, for TV company Belo Corp.

GCI's stock fell 19 cents in early afternoon trading, to $24.79.

Related: TV networks face falling ratings and new rivals.

June 10-16 | Your News & Comments: Part 5

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