A Federal Communications Commission agency has ruled in favor of allowing KGMB-TV, KHNL-TV and KFVE-TV to continue their combined operation, a decision that will be appealed by Media Council Hawaii.

The local group will appeal to the full FCC a decision by its Media Bureau, which oversees broadcast radio and television.

"The decision is absolutely unacceptable," Chris Conybeare, MCH president, said Tuesday. "The public is entitled to have diverse voices, diverse views and diverse opinions, and we’re not going to take it lying down."

Paul McTear, president and chief executive officer of Alabama-based Raycom Media Inc., parent company of KGMB-TV and KHNL-TV, was not available for comment. The FCC licensee over KFVE is HITV License Subsidiary Inc., a unit of Virginia-based MCG Capital Corp.

The arrangement, which took effect in October 2009, was described as an asset exchange that Raycom and MCG said did not involve the stations’ licenses and therefore did not require FCC approval or oversight. The deal contains complex financial terms and a term loan note in which Raycom agreed to pay HITV $22 million. Raycom also acquired the right to acquire KFVE in the future but later assigned that right to another entity.

"We’re very pleased with the FCC’s decision," said John Fink, general manager of KFVE-TV and longtime Hawaii broadcaster. "The FCC has now held that HITV’s transaction with Raycom complies with all FCC rules and policies, as we have said all along."

Part of the decision requires KFVE to pay $10,000 to the government for failing to have its public file available for inspection.

"We recognize the FCC issued a fine," but the public-file matter has long been rectified, he said.

The fine is "no more than a slap on the wrist," said Angela Campbell, director of the Institute for Public Representation at the Georgetown University Law Center, which represented MCH in the matter and will continue to do so by filing an appeal.

"The two major claims we made," she said, were that the arrangement represented an "unauthorized transfer of control with Raycom controlling all three stations while claiming they only had two," and that no entity can own two of the four top-rated stations in a market. KGMB and KHNL are among the top four rated stations. The Media Bureau’s rationale behind dismissing those two points "is really circular reasoning to me," she said.

Rick Blangiardi, general manger of Hawaii News Now (KGMB and KHNL), did not return a call.

McTear, Fink and Blangiardi, then vice president and general manager of KGMB, announced the planned shared-services agreement in August 2009, citing financial necessity stemming from the local broadcast industry’s loss of millions of dollars in cash flow during the economic crisis.

The consolidation of the competing KGMB and KHNL newsrooms and other departments included the layoffs of about one-third of staff members at all three stations.