Belo Corp., owner of Fox affiliate KMSB 11 and KTTU 18, announced today it has agreed to be sold to Gannett in a deal valued at $2.2 billion cash but it appears the sale will have little, if any, effect on the two Tucson stations.
In a memo to employees, Belo included Tucson among “five markets where current (Federal Communications Commission) ownership rules would prevent Gannett from acquiring our stations” so the plan is for an ownership restructuring that will put the stations under one of two independent third-party broadcast operators.
“Gannett will provide certain services to those third parties under sharing arrangements tailored to each station,” the memo said.
Both KMSB and KTTU are already operating under a shared services agreement with Raycom Media, owner of CBS affiliate KOLD 13, which operates the two stations and provides local news programming. Belo maintains a separate advertising sales staff and presumably those employees would become Gannett employees.
In essence the two stations currently owned by Belo would wind up being operated under two separate shared services with an as-yet unidentified independent owner.
For her part, Debbie Bush, vice president and general manager of KOLD, said, “As far as we are concerned, there won’t be any changes with the shared service agreement. We’ll just be working with Gannett instead of Belo after the sale.”
The other four markets separated out from the outright sale to Gannett are Phoenix; Louisville, Ky.; Portland, Ore.; and St. Louis. In each market the combination would conflict with FCC ownership rules prohibiting any one company from owning more than one top four-rated TV station in a market or cross-ownership with a newspaper in the same market.
Although the FCC has been lenient in granting waivers of the newspaper cross-ownership rule, Gannett already has one in Phoenix and it would appear doesn’t want to raise the issue over its half-ownership of Tucson Newspapers, the company that publishes the Arizona Daily Star.
In Phoenix, a combination of Gannett and Belo properties would have raised even more red flags. Gannett owns the Arizona Republic newspaper and NBC TV affiliate KPNX. Belo owns KTVK, one of the nation’s most successful independent TV stations and among the top four rated stations in the market, and KASW, the CW affiliate.
The companies said they hope their deal, which is subject to shareholder and regulatory approvals, will close near the end of this year.
In its memo to employees, Belo said, “Gannett anticipates minimal impact on our station employees as a result of this transaction.”
Belo said, “Believing scale to be very important to the long-term success of our franchises,” the board and management of the company had spent the last several months considering various alternatives for increasing the scale of its media businesses.
“With a market capitalization of $5 billion and 2012 revenue of $6 billion, Gannett is a leader in the media industry with a diverse portfolio of broadcast, digital, mobile and publishing assets,” the memo read, noting that the combination of Belo and Gannett TV stations will be one of the largest in the U.S. The combined group will be made up of 43 stations reaching nearly one third of the nation’s TV households.