Federal regulators are seeking a half-million dollar fine against Gray Television over its ownership of two television stations in Alaska.
In a notice published on Wednesday, the Federal Communications Commission (FCC) accused Gray of avoiding specific ownership rules that prohibit a broadcaster from owning or operating two dominant stations in a local broadcast market.
The situation dates back to last year when Gray sought to expand its footprint in the Anchorage market by acquiring certain media assets from a competitor. At that time, Gray operated KTUU (Channel 2), the area’s NBC affiliate, along with KYES-TV (Channel 5), which was the MyNetwork affiliate for the region.
Last July, Gray announced it was acquiring the media assets of its competitor, CBS affiliate KTVA (Channel 11) through a transaction that would involve moving the CBS affiliation from KTVA to KYES-TV. Gray maintained the MyNetwork affiliation on KYES, moving it down to a digital subchannel.
As a result of the transaction, KTVA — which is owned by cable provider GCI Communications through a holding firm — went off the air. The station’s news team and other assets were integrated with that of KTUU upon completion of the sale, and KYES’ call letters were changed to KAUU.
Federal regulators say the entire scheme was an apparent ploy to grab the CBS affiliation from a competitor, and it violated the FCC’s rules on one broadcaster owning or operating two of the top four television stations in the market. While stations can apply for a waiver from this regulation, the FCC said Gray never sought one.
“By executing and consummating an agreement to apparently purchase the CBS affiliation from KTVA for [KAUU], Gray caused a change in network affiliation that resulted in Gray’s owning and operating the top two of the top-four stations in the Anchorage [market]…in violation of Commission’s rules,” the FCC said.
The FCC is now proposing a fine against Gray that would result in the broadcaster forfeiting more than $518,000 — the maximum allowed by law for the kind of activity the FCC alleges. The regulator noted it has never fined a broadcaster “for the acquisition of an affiliation” in violation of its ownership rules.
Gray has 30 days to file a response to the FCC’s forfeiture proposal. The response can include a request that the FCC reduce its financial liability.