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ACA, DirecTV, TWC Ask FCC to Block Part of Gannett/Belo Deal

MVPDs large and small asked the FCC on Wednesday to deny the
transfer of the licenses of Belo's KMOV St. Louis; KTVK and KASW, both Phoenix;
and KMSB and KTTU, both Tucson, or at least condition the transfer on
disallowing coordinated carriage negotiations. That is according to a copy of
the just-filed petition.

Those stations are part of Gannett's $2.2 billion (cash and
debt) deal to buy Belo's broadcast holdings.

But because they are in markets where Gannett already owns
stations and could not own more without violating FCC local ownership limits,
Gannett is spinning them off to new owners. Those are Jack Sander, former Belo
group chief, and Ben Tucker, former head of the Fisher station group. But
Gannett is still identifying those stations as part of a new Gannett Super
Group, and plans to get credit from Wall Street by consolidating their
performance into Gannett financial results.

The FCC deadline for filing petitions to deny the deal is July
25. The petitioners are the American Cable Association, which represents
hundreds of smaller and mid-sized operators; DirecTV; and Time Warner Cable
(which joined as an 'informal objector').

"If granted, the Applications would create new virtual
duopolies and facilitate coordinated retransmission consent negotiations in the
St. Louis, Missouri; Phoenix, Arizona; and Tucson, Arizona designated market
areas (DMA's)," the petition says. "As a result, Gannett -- which would
become the fourth-largest owner of television stations nationwide -- would enjoy a
significant increase in negotiating leverage based solely on its aggregation of
market power. The transaction accordingly threatens to drive up retransmission
consent fees (and, in tum, consumer prices) and to increase the risk and
incidence of broadcast programming blackouts in these DMAs.

"If the FCC does approve those transfers, the petitioners
want a condition that Gannett and the assignees of the stations at issue
[Sander and Tucker] refrain from coordinating negotiations for carriage on
behalf of any of their non-commonly owned stations in any of such stations'
markets, whether by engaging in joint carriage negotiations, each appointing
the same agent to negotiate on behalf of each of the stations, negotiating
separate carriage deals but sharing details of each of their carriage
negotiations, sharing any details of their carriage negotiations at any time,
or in any other way colluding in the negotiation of retransmission

The FCC under chairman Julius Genachowski proposed making
some TV station joint sales agreements attributable under the FCC's local
market caps as part of his proposed ownership changes, but those have yet to be
acted on.

The Belo deal would swell Gannett from 23 stations to a
43-station "super group."

At a Senate Commerce Committee nomination hearing last month
for FCC chair nominee Tom Wheeler, who will likely be chairman by the time the
FCC weighs in on the petition, veteran media consolidation critic Sen. Maria
Cantwell (D-Wash.) brought up the Gannett/Belo deal. She said she saw it as an
effort by Gannett to "use shared services agreements as a way to get
around [FCC local ownership] rules." She said she was very concerned about
the issue.

Wheeler said he understood the seriousness of
the issue, but 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."

"This transaction is entirely consistent with all FCC rules, policies and precedent," Gannett said in a statement, "and will bring substantial benefits to the public."