KVBC-TV sues three rivals

When is a news story not a news story and a commercial not a commercial?

When each one is the other.

On Wednesday, KVBC-TV, Channel 3, accused its competitors of blurring the two. The station filed a complaint with the Federal Communications Commission against KVVU-TV, Channel 5; KLAS-TV, Channel 8; and KTNV-TV, Channel 13, charging that the stations sold airtime to an advertiser inside their newscasts and used reporters to conduct interviews presented as objective news stories without disclosing that the segments were purchased.

That would violate the FCC sponsorship identification rules, and Channel 3 has requested an investigation into the alleged practice. Typically, stations have 30 days to respond to a complaint.

"It is extremely rare for a station to go to the FCC and complain about a competitor selling coverage for advertisement," said Al Thompkins, who teaches broadcast journalism ethics at the Poynter Institute, a respected journalism school. "What we will likely get out of this is real insight as to how stations make the decisions they make and what values they have when it comes to the separation of news and sales."

The complaint says the violations occurred between May 22 and June 22. It reads, in part, that the three stations "knowingly entered into agreements and understandings with Arrowhead Advertising ... and United Dodge Chrysler Jeep ... for the production and airing of advertisements in the form of on-site interviews promoting the liquidation sale of cars whose franchise had been cancelled by Chrysler Corporation. These interviews were inserted into the regular programming of the stations in the guise of 'news interviews.' These 'news interviews' were aired repeatedly without any disclosure that they were aired in consideration for the purchase of regular spot schedules."

Recounting the incident, the complaint claims that in May, KVBC account executive Christy Haldeman was told by an Arrowhead representative that "if you cannot guarantee the news coverage, you won't get that buy." It further claims that Arrowhead again attempted to gain news coverage for another client, United Nissan, emphasizing that the station missed out on the first deal because of its "news coverage stipulation."

Lisa Howfield, Channel 3's general manager, referred inquiries to Dominic Monahan, an attorney for Channel 3's owner, Sunbelt Communications Co., who filed the complaint on behalf of the station. "We've been able to gather a pretty convincing case," Monahan said about the charges, given that they might be difficult to prove when the closure of car dealerships and auto liquidation sales were generating many legitimate news stories last spring. "We have copies of the e-mail exchange when the agency was attempting to place the buy with KVBC and the response from the (Channel 3) ad executive that we can't guarantee placement because it's against the law."

Response from Channel 3's competitors ranged from flat denial to genuine anger.

"I am furious," said Emily Neilson, Channel 8's president and general manager. "News coverage on Channel 8 is determined solely by news management: period. Our agreements with advertisers never include guarantees of news coverage, despite what an overzealous media buyer seemed to imply."

Neilson added that all employees are given a copy of the FCC regulations against so-called "payola" and must sign it, understanding that violators will be disciplined and possibly terminated.

"The bankruptcy of Chrysler was a major news story. During that period we interviewed representatives from three of the four local Chrysler dealerships and requested an interview with the fourth. We intend to vigorously fight these false claims."

Darrin McDonald, Channel 5's general manager, called the allegations "totally without merit. We covered multiple dealerships in multiple newscasts during that time when it was a national and local story of public interest."

Jim Thomas, a spokesman for Channel 13's owner, Journal Broadcast Group, said that "the claims by KVBC-TV are false," adding: "Although the advertising agency representing the client at issue did request news coverage for the client as part of the advertising buy, KTNV declined to provide such news coverage."

The station did, Thomas said, produce ads for the dealership that ran in regularly scheduled commercial breaks.

Kyle Eng, owner of Arrowhead Advertising, called the charges "unequivocally false. We understand the separation between church and state (the principle of news decisions never being influenced by sales considerations). And during that time, the government shut down 789 Dodge and Chrysler and Jeep dealerships, so we didn't have to ask for coverage. It was one of the biggest stories of the year and we were getting calls from news directors left and right."

Eng also said poor ratings played a role in Channel 3's exclusion from the ad buy.

"Our media buys are based on ratings toward our core customers and that is why KVBC was left out of the buy," Eng said. "The ratings books speak for themselves."

However, ratings compiled by A.C. Nielsen Co. for newscasts in May show that in the 25-to-54-year-old demographic that advertisers covet, Channel 3 placed second to Channel 8 at 5 and 11 p.m., and came in first at 6 p.m., in all cases beating channels 13 and 5, which does not have a 6 p.m. newscast.

Channel 3's complaint included transcripts of stories on the dealership: May 27 at 11 p.m. on Channel 13, June 8 at 5 p.m. on Channel 8, June 9 at 5:30 p.m. on Channel 5.

"It's absolutely ludicrous, the most ridiculous thing I've ever heard," said Channel 8 managing editor Terri Foley, who assigned the story in a morning news meeting. "We do not operate that way. Channel 8's reputation stands on its own."

Channel 8 reporter Aaron Drawhorn, who filed the story, added: This is the first time I've ever heard of Arrowhead. I never came in contact with any salesperson, I was never pressured in any sort of way to go to a particular dealership or about who I should talk to and what should be included."

Thompkins of the Poynter Institute said the Channel 3 filing comes at a time of heightened awareness and new regulations by the FCC to crack down on payola issues that date back to 1934, most notably in radio and disc jockey scandals.

"You're in a really competitive town, a lot of stations are vying for the same audience, and advertising is tough," Thompkins said. "The best possible explanation I can see is that (Channel 3) is trying to level the playing field. This will be an interesting one to watch."

Contact reporter Steve Bornfeld at sbornfeld@reviewjournal.com or 702-383-0256.