Cunningham Broadcasting

Cunningham Broadcasting Corporation is an owner of television stations in the United States. The company currently owns six stations—four affiliated with Fox Broadcasting Company (one of which also carries MyNetworkTV on a digital subchannel), one affiliated with MyNetworkTV and one affiliated with The CW Television Network.

Cunningham has very close ties to Sinclair Broadcast Group. All six Cunningham stations are operated by Sinclair under local marketing agreements. In addition, over 90 percent of Cunningham's stock is controlled by trusts in the name of Sinclair founder David Smith's children. Based on these arrangements, Cunningham appears to be a shell corporation that Sinclair uses to circumvent Federal Communications Commission regulations on ownership.^[1]

History

Cunningham was founded in 1994 as Glencairn, Ltd. It was headed by Edwin Edwards, a former Sinclair executive. Edwards had been general manager of one of Sinclair's original stations, WPTT-TV in Pittsburgh. Sinclair sold WPTT to Edwards after Sinclair bought rival WPGH-TV, but continued to operate the station under a local marketing agreement before buying the station back outright in 2000.

The initial capital was supplied by Carolyn Smith, wife of Sinclair founder Julian Smith and mother of current Sinclair CEO David Smith. Carolyn Smith also controlled 70% of Glencairn's stock. However, Glencairn held itself out as a minority-owned broadcaster (Edwards is black), gaining instant favor with the FCC.

Glencairn's initial purchase set the stage for its future dealings. In 1994, Sinclair merged with Abry Communications, which owned WNUV in Baltimore. WNUV had been the principal rival to Sinclair's flagship station, WBFF. Sinclair could not keep both stations because FCC rules at the time did not allow common ownership of two stations in a single market. Accordingly, Glencairn bought WNUV from Sinclair, and Sinclair took over WNUV's operations under an LMA. However, due to the Smiths' controlling interest in Glencairn, Sinclair effectively had a duopoly in Baltimore--and had all but emasculated its principal rival.

Glencairn eventually bought ten more stations, and Sinclair controlled all their operations via LMAs. Due to Glencairn's financial structure (the Smiths eventually bought 97% of Glencairn's stock), Sinclair effectively had duopolies in all 11 markets. FCC rules at the time did not allow common ownership of two stations in a single market. Among the more notable purchases:

• As part of the Abry merger, Sinclair also acquired WNRW-TV (now WXLV-TV) in Winston-Salem, North Carolina. It simulcast its programming on separately-owned WGGT-TV in Greensboro. Glencairn bought WGGT from its previous owner, ended the simulcast and turned WGGT into an affiliate of the fledgling UPN as WUPN-TV (now WMYV).

• In 1995, Glencairn bought WRDC-TV in Raleigh, North Carolina and gave Sinclair control of its operations via an LMA. Sinclair already owned WLFL in Raleigh. In effect, Sinclair now had duopolies in two of North Carolina's largest markets.

• In 1996, Sinclair merged with River City Broadcasting, which owned WSYX in Columbus, Ohio. This initially posed a problem for Sinclair, as it already owned WTTE in Columbus. Sinclair decided to keep the higher-rated WSYX and sold WTTE to Glencairn. Sinclair continued to operate WTTE through an LMA. River City also owned WLOS in Asheville, North Carolina and satellite station WAXA-TV in Anderson, South Carolina. Sinclair sold WAXA to Glencairn, who ended the simulcast and turned WAXA into an independent, later changing the calls to WFBC-TV and later WBSC-TV.

• In 1997, Sinclair purchased the broadcasting properties of Heritage Media, which included WCHS-TV in Charleston, West Virginia. Sinclair already owned WVAH-TV in Charleston, but opted to keep the longer-established WCHS and sold WVAH to Glencairn. Also that year, Glencairn bought KRRT (now KMYS) in San Antonio, Texas, which already had an existing LMA with KABB (which Sinclair had acquired the previous year as part of its purchase of River City).

• In 1998, Sinclair and Glencairn teamed up to buy five stations from Sullivan Broadcasting. Glencairn simply bought the licenses while Sinclair bought the stations' other assets. Sinclair then leased the non-license assets back to Glencairn.

The 1999–2001 dispute

In 1999, the FCC finally relaxed its ownership rules and allowed one person to own two stations in a market starting in 2001. Ironically, this development brought the Sinclair-Glencairn arrangement to light for the first time. At the time, Glencairn was getting ready to buy Sullivan-owned KOKH in Oklahoma City, where Sinclair already owned KOCB. When the FCC relaxed its rules, Sinclair simply replaced Glencairn as the buyer for KOKH. Glencairn then announced plans to sell five of its stations to Sinclair outright.

This move led Jesse Jackson and others to file challenges to the proposed transactions. In the course of subsequent hearings, it emerged that Edwards did not know how much debt Glencairn would assume when the deals closed. This led FCC Commissioner Michael Copps to question the deal's integrity, as well as Glencairn's decision-making process. It later emerged that Glencairn was to be paid for the proposed purchases with Sinclair stock, and that the Smiths controlled almost all of Glencairn's stock. Eventually, the FCC slapped Sinclair with a $40,000 fine for illegally controlling Glencairn. However, it took no further action, leading Copps to blast the decision as a backhanded endorsement of Sinclair's tactics.

Glencairn becomes Cunningham

In 2001, Glencairn tried to merge with Sinclair outright. However, the FCC rejected the deal because six of Glencairn's stations--WNUV, WVAH, WTTE, WBSC, WRGT-TV in Dayton, Ohio and WTAT-TV in Charleston, South Carolina were located in markets where Sinclair could not legally have duopolies. The reasons stated:

• WNUV: Baltimore, despite being the 24th market, has only seven full-power stations. The FCC requires a market to have eight unique station owners once a duopoly is formed, not counting low-power stations.
• WTTE: Sinclair-owned WSYX is the third-rated station in Columbus while WTTE is the fourth-rated station. FCC rules do not allow common ownership of two of the four highest-rated stations in a single market. Also, Columbus, despite being the 32nd-largest market, has only seven full-power stations--too few to allow a duopoly in any case.
• WBSC: The FCC already permitted Media General, owner of WSPA-TV, to buy LMA partner WASV (now WYCW), and a Sinclair purchase of WBSC (now WMYA-TV) would leave only seven unique owners in the Greenville-Spartanburg-Asheville market.
• WVAH: Sinclair-owned WCHS is the 2nd-rated station in the Huntington-Charleston market, while WVAH is #4.
• WRGT: Dayton has only seven full-power stations--too few to allow duopolies. Plus, Sinclair already owned WKEF, the #3 station, while WRGT is #4.
• WTAT: Charleston has only six full-power stations--too few to allow duopolies. WTAT was nominally junior partner in an LMA with WMMP, which Sinclair had acquired in a group deal in July 1998.

Sinclair, however, was able to buy five of Glencairn's stations, and Glencairn subsequently changed its name to Cunningham Broadcasting. However, nearly all of Cunningham's stock is owned by trusts in the name of the children of the Smith brothers, so Sinclair still effectively owns Cunningham.^[2] This situation led Sinclair Media Watch, a grassroots organization based in Asheville, to file informal objections when WLOS and WBSC's licenses came up for renewal in 2004. However, the FCC has taken no further action against Sinclair or Cunningham.

^[3]

References

1. ^ SinclairWatch.org
2. ^ Family's TV Clout in Bush's Corner, Howard Kurtz and Frank Ahrens, Washington Post, October 12, 2004, Page A1
3. ^ Sinclair Media Watch challenge to WLOS and WBSC licenses

See also

• Duopoly (broadcasting)