FCC Approves Gray TV Duopoly in Sioux Falls; First Case Nationally

The FCC has approved Gray TV’s purchase of a second top-four station in Sioux Falls, marking the first time nationally that the regulator has allowed a combination of two top-four stations in one market.

Gray is buying NBC affiliate KDLT/46.1 from Red River Broadcast Corp. for $32.5 million. A 2018 Gray TV news release said KDLT will be moved into the same building as Gray’s existing ABC affiliate, KSFY/13.1, and the company has committed to adding numerous newscasts on the two stations — though some KDLT newscasts will move to new timeslots that don’t compete with KSFY.

KSFY and KDLT reported that Gray closed on the purchase on Wednesday (Sept. 25), the day after the deal was approved. Gray has not issued a news release about the FCC order or the closing, telling the Sioux Falls Argus Leader that it was not commenting and SiouxFalls.Business that there would be no changes at either station for awhile. KDLT carried its normal newscasts Wednesday evening.

“As a viewer, you’re not likely to notice much difference,” KDLT reported on its Wednesday 6 p.m. newscast. “Even though we will be owned by the same company, both stations are expected to retain their individual identities. Viewers can continue to count on KDLT for excellent news coverage, programming, and service to the community.”

The combination marks the first time that regulators have allowed a company that owns one full-power, top-four station to buy a second full-power, top-four station, rather than using workarounds like joint sales agreements or subchannel/low-power TV affiliations. The FCC said as part of 2017 ownership rule changes that it would consider top four combinations on a case-by-case basis.

Tuesday’s FCC Media Bureau order came a day after the U.S. Circuit Court of Appeals for the Third District in Philadelphia overturned the 2017 ownership rule changes, ordering the FCC to reconsider their effect on minority and female broadcasters. However, the Media Bureau order approving the KDLT sale says the 2017 changes are still technically in effect because “the mandate in that case has not yet issued.”

Commissioner Jessica Rosenworcel, one of two Democrats on the five-member commission, expressed her opposition to the decision on Twitter.

“This is brazen. It will infuriate the court. And it saddens me that the agency has so little respect for the rule of law,” Rosenworcel wrote.

In approving the sale, the Media Bureau cited Gray’s commitment to adding newscasts, creating a state capitol news bureau in Pierre to serve Gray’s stations in both Sioux Falls and Rapid City, upgrading the stations’ weather equipment, and expanding network coverage by combining the two stations’ transmitter networks.

The order also mentioned Nexstar CBS affiliate KELO-TV’s longtime dominance in the market. Gray’s 2018 application said that KELO’s market share had never fallen below 56.6 percent in the previous five years, while the combined share of KDLT and KSFY never exceeded 35.7 percent over that period.

The FCC order says:

The Applicants note that KDLT-TV is already struggling to maintain a profitable local news operation and that, without relief, “it is only a matter of time before KDLT-TV is forced to eliminate its local news.” Thus, in the particular circumstances of this market, we are skeptical that requiring KSFY-TV and KDLT-TV to remain independently owned and operated is necessary to ensure competition in the Sioux Falls DMA. Rather, there is some evidence that permitting Gray to own both KSFY-TV and KDLT-TV would make these stations more likely to become stronger competitors to KELO-TV, thereby spurring improvement and innovation in the market as the Applicants commit to do, and that this will benefit viewers in the Sioux Falls market.

The Sioux Falls market includes the eastern two-thirds of South Dakota in addition to five counties in southwestern Minnesota, two counties in northwestern Iowa, and one county in north-central Nebraska. Geographically, Gray says it its the second-largest small market in the country (markets ranked 100 and below), after Bismarck-Minot.

KELO-TV signed on in 1953 and had the market to itself until KSFY and KDLT’s forerunners signed on in 1960. Despite numerous efforts by multiple owners, KSFY and KDLT have never been able to surpass KELO in the ratings.

Gray has committed to adding 28 hours of additional news programming on the two stations, though filings have not indicated whether there would be a net gain or loss of TV news jobs in the market as a result of KDLT’s move into the KSFY building. A document submitted as part of the application last December listed the newscast additions and changes as follows:

• A 7 to 9 a.m. weekday newscast on KSFY’s CW subchannel
• An hourlong news and talk show on KSFY at 9 a.m. weekdays
• A half-hour newscast on KDLT at 11 a.m. weekdays
• An hourlong newscast on KDLT at 4 p.m. weekdays
• KDLT’s current 5 p.m. and 6 p.m. weeknight newscasts would move to 5:30 and 6:30, removing them from competition with KSFY.
• A half-hour newscast on KSFY’s CW subchannel at 9 p.m. seven days a week
• Weekend morning newscasts on KSFY.

All of the new newscasts will be in timeslots that don’t currently have local newscasts (the market’s FOX affiliate doesn’t have a news department). Gray’s document says the additional newscasts will allow it to “flood the market with an additional 285 new advertising spots per week.”

Meanwhile, the document indicates that KDLT’s NBC channel will be added to a subchannel of KSFY satellite KPRY (Pierre), and KSFY’s ABC channel will be added into KDLT’s transmitter network. The deal includes KDLT satellite KDLV (Mitchell) and six translators, many serving areas that lost ABC when Gray returned the license of KABY/9 (Aberdeen).