Raycom Media, owner of KHNL and K5, and MCG Capital Corporation, owner of KGMB, announced today a shared services agreement which, upon completion, the two companies would combine the three stations to creatively and successfully address the impact of the negative economy and to secure the future of all three television stations in Hawaii.
"The purpose of a shared services agreement is to not only secure the future of KHNL, K5 and KGMB, but to operate them more efficiently and effectively without diminishing the quality of news and other programming provided to our customers in Hawaii,"said Paul McTear, President and CEO of Raycom Media.
"We realize there may be other financial and business options available, and while we are certainly open to discussing these with any interested party, the economic reality is that this market cannot support five traditionally separated television stations, all with duplicated costs. Rather than experiencing the loss of one, or possibly two stations in Hawaii, we intend to preserve three stations that provide important and valuable local, national and international programming to viewers in Hawaii."
Under the agreement, Raycom Media would provide certain services to all three stations. The agreement is an operational arrangement, not an ownership change agreement. Raycom Media retains ownership of KHNL/K5 and MCG Capital Corporation retains ownership of KGMB.
"Companies that think and act far more creatively to protect their businesses and employees in this economy are the ones that are going to weather the storm and emerge stronger," said McTear. "Raycom Media is proud of its long relationship with Hawaii, and with the University of Hawaii, and we are excited that an agreement would allow us to, not only continue to serve the islands, but to serve residents in even more and better ways."
Raycom Media's KFVE, or "K5," produces and broadcasts well over 100 live sports events each year for the University of Hawaii.
The shared services agreement creates what would be the largest local television news operation available to cover local, national and international news for Hawaii. The KGMB, KHNL, K5 newsroom and all those working there plan to produce more than 40 hours of local news each week, making it among the most productive newsrooms in the country. The stations will also continue to provide local web sites rich in news, weather, sports, entertainment, business, advertising and other content of community interest.
"Such an agreement allows the three stations to field the largest number of news professionals, particularly during times of major breaking news or severe weather, providing better coverage of stories impacting the lives of everyone who lives on the islands, and produced on multiple platforms - television, internet and on mobile devices." added McTear.
"Given the challenges of operating a standalone station in these very difficult markets, MCG views the shared services agreement as a smart and creative way to manage its continuing ownership investment in KGMB," said Rick Blangiardi, President and General Manager of KGMB and MCG Capital's representative in Hawaii.
"We are very proud of our employees and the work that they do. Under a new agreement, KGMB, and the people who work there, will benefit from the scale and diversity which comes from a company like Raycom Media, recognized as a company that will be an integral part of the broadcast industry for years to come."
Under a shared services agreement, the three stations will share in the news services as well as other combined services. It's anticipated that, once the two companies swap call letters, the national networks and other programming, along with the accompanying channel positions of each of the three stations, will remain the same.
Raycom Media, an employee-owned company, is one of the nation's largest broadcasters and owns and operates 46 television stations in 36 markets and 18 states, including Hawaii. In addition to television stations, Raycom owns Raycom Sports, a marketing, production and events management and distribution company; Raycom Post, a post production facility; Broadview Media, a post production telecommunications company; and CableVantage, a cable advertising sales group.
MCG Capital Corporation is a solutions-focused commercial finance company providing capital and advisory services to middle-market companies throughout the United States. Our investment objective is to achieve current income and capital gains. Our capital is generally used by our portfolio companies to finance acquisitions, recapitalizations, buyouts, organic growth and working capital. For more information, please visit www.mcgcapital.com.