The Atlanta-based owner of Alaska television stations is challenging a $518,000 fine brought against it by the Federal Communications Commission.
The dispute stems from Gray Television’s decision in 2020 to acquire the CBS network affiliation and programming assets of KTVA Channel 11 in Anchorage, an action the federal agency says gave Gray Television too much control of the Anchorage TV market.
Since Gray Television already owned KTUU, the NBC affiliate, the acquisition in 2020 gave Gray Television control of Anchorage’s two local TV news stations at the time, which were later combined into the single outlet Alaska’s News Source.
The federal agency, which regulates television and other interstate and international communications, issued the fine against Gray Television in a November order, arguing that the TV broadcast giant had “willfully and repeatedly” violated agency rules when the acquisition of CBS programming caused it to own the two leading stations in the same Nielsen Designated Market Area.
“The Local Television Ownership Rule prohibits an entity from owning two full-power television stations in the same (Designated Market Area) if both commonly owned stations are ranked among the top-four rated stations in the market,” the order says.
This week, Gray Television filed its petition challenging the fine before the 11th U.S. Circuit Court of Appeals. That court’s jurisdiction includes Atlanta, where Gray is headquartered.
Executives with KTUU and Gray Television did not return phone calls seeking comment for this story Friday.
Gray Television has stations in more than 100 television markets reaching one-third of U.S. households. It reported revenue of $3.7 billion last year. It entered the Anchorage market in 2016 when it acquired KTUU.
The company argues in its appeal that it properly acquired the CBS affiliation in 2020, according to its 71-page petition filed Wednesday. It says it purchased the programming from KTVA, which was owned by GCI’s Denali Media Holdings and had been struggling in a market with declining ad revenue, had laid off many newsroom employees, and could not find other buyers.
“Gray did not purchase KTVA(TV)’s station license, and KTVA(TV) retained its broadcasting facilities, leaving KTVA(TV) free to operate as an independent station or through a different network affiliation (which it did in September 2021),” the petition says.
The CBS affiliation is now part of KAUU Channel 5, which had been under the call sign KYES-TV until 2021, the FCC order says.
Gray Television asserts that the FCC committed multiple errors, including creating new interpretations of its rules to uphold the penalty and maintain a fine that’s unprecedented in its amount.
It argues that the agency is violating Gray Television’s free-speech rights by improperly attempting to prohibit its programming, without providing a legitimate government interest for the action. Gray Television says it worked in good faith with the FCC to resolve the concerns.
The petition “raises important questions regarding whether the FCC has the power to restrict First Amendment speech in this manner, whether the agency may punish a regulated party without giving fair notice of rule changes made during the administrative proceeding, and whether unprecedented penalties assessed under the circumstances are proper,” Gray Television argues.
The federal agency argues that Gray Television violated the law because its purchase of the CBS affiliation was the “functional equivalent” of a license transfer.
Gray Television argues that the FCC does not have congressional authority “to regulate the ‘functional equivalent’ of license transfers.”
Gray Television is seeking oral arguments as a next step in the case.