Combined Communications Corp. merged into the Gannett Corp. yesterday just two hours after receiving approval from the Federal Communications Commission. It was the largest communications merger in U.S. history.
The FCC had considered the proposed merger for more than a year. The commission approved the merger by a 5-1 vote with commissioner Abbott M. Washburn dissenting.
The merger means that Gannett, which paid $370 million in stock for CCC, now operates 80 daily newspapers, seven television stations, 12 radio stations, outdoor advertising in the U.S. and Canada, as well as weekly newspapers, Canadian newsprint interests, and marketing, research and news service subsidiaries.
Announced as part of the overall deal was Gannett's sale of its Rochester television station to Broadcast Enterprises Network, Inc., a minority-operated Philadelphia-based broadcasting company, for $27 million.
With that sale, the station - WHEC-TV - becomes the first major-market, VHF, network-affiliated TV station in the nation to be owned by blacks. The major stockholder is broadcastor Ragan Henry.
Gannett and CCC together earned $112.4 million on revenues of $980 million last year.
The major hangups before the FCC approved involved a fear on the part of at least one of the seven commissioners that this merger added to a worrisome trend toward media concentration in this country, and the fact that CCC could be accused of "trafficking" in broadcast properties.
"Trafficking" is defined by the FCC as buying and selling broadcast properties for profit rather than serving the public interest. The commission has a rule stating that the companies buying broadcast properties must hold them for three years before selling them, in order to discourage trafficking.
The FCC debated whether to allow a waiver of the rules in this case, since CCC had purchased nine of its broadcast properties within the past three years.
The commission noted, in deciding to grant the waiver, that CCC acquired most of its broadcast properties many years ago and had no history of buying and selling stations for profit.
A third surprise issue also played a part in the prolonged commission debate yesterday: a new proposal from Commissioner Tyrone Brown that the FCC consider all radio combinations - that is combined AM and FM stations that have generally been treated as one - as separate entities for the purpose of license renewal.
The commission indicated it would consider such an action in the future and decided to make its approval of this merger contingent on the fact that, if the FCC decides later to separate the stations, Gannett's stations would have to comply with any new regulations.
But any other license applications filed by yesterday would be grandfathered, that is, treated as if the proposed new regulation didn't exist. Any application filed after yesterday would be in the same category as the Gannett stations.
Gannett accepted the qualification, which Gannett chairman and president Allen H. Neuharth called "minor."
In a press conference after the deal was consummated. Neuharth and CCC president and chief executive Karl Eller discussed the future of the new company.
Gannett will remain headquartered in Rochester, N.Y., while Eller said CCC will operate as a wholly owned subsidiary from its present headquarters in Phoenix. Eller said he "loved Rochester," but after pausing called it "a nice place to visit."
Eller and two other CCC directors will be elected to the Gannett board of directors at its next meeting June 26, Neuharth said, and Eller will become a member of a new Gannett "office of the cheif executive."
Although CCC's two newspapers are big-city dailies - the Oakland Tribune and the Cincinnati Enquirer - Neuharth said Gannett would not be altering its policy of acquiring papers predominantly in small and medium towns.
"We are not looking at top metro markets," Neuharth said. But, he added, "we are talking to people with print properties - not just newspapers." CAPTION: Picture, Gannett's Al Neuharth, left, and Karl Eller of Combined Communications.
By Frank Johnston - The Washington Post