****************** ****************** ****************** ** NOTICE ****************** ****************** ****************** ** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ****************** ****************** ****************** *********** 1800E1-DB DA 01-1250 Univision Communications, Inc. c/o Scott R. Flick, Esq. ShawPittman 2300 N Street, NW Washington, D.C. 20037 Re: Applications for Transfer of Control WQHS-TV, Cleveland, OH, et al. BTCCT-20010123AAL-AAX Dear Mr. Flick: This is with regard to the above-referenced applications seeking consent to the transfer of control of 13 licenses currently held by various wholly owned subsidiaries of USA Broadcasting, Inc. (USA Broadcasting), to Univision Communications, Inc. (Univision). On March 2, 2001, Theodore M. White, Chief Executive Officer and sole voting shareholder of Urban Broadcasting Corporation (Urban), the permittee of WTMW(TV), Arlington, Virginia, filed a petition to deny. USA Broadcasting has a nonvoting stock interest in and contractual relationship with Urban, the substance of which the Commission addressed in Roy M. Speer, 11 FCC Rcd 18393 (1996) (Speer III). Although Univision challenges Urban's standing, we will consider Urban's arguments. 47 C.F.R. 73.3587. In connection with the transaction, Univision requests a continued satellite exception pursuant to Note 5 of the television duopoly rule, 47 C.F.R. 73.3555(b), in the New York, New York DMA. Petition to Deny. The petition results from the collapse of the business relationship between USA Broadcasting and Urban. A predecessor-in-interest to USA Broadcasting loaned funds to Urban for construction and operation of station WTMW(TV), while the Home Shopping Network, entered into an affiliation agreement with Urban. Under the affiliation agreement, Urban would be compensated at a fixed rate for each hour the station carried Home Shopping Network programming, which provided the income that Urban used to repay the loan. Pursuant to an amendment to the original affiliation agreement, the parties agreed that Urban would only be paid for those hours WTMW(TV) aired Home Shopping Network programming at 50% or greater of its full licensed operating power. WTMW(TV) has been unable to operate at 50% of the maximum ERP of 2880 kw as originally listed on the April 6, 1993 application for license due to potential interference with police land mobile operations in the District of Columbia. USA Broadcasting eventually filed suit for breach of the loan agreement in the Arlington County Circuit Court. Urban maintains that USA Broadcasting deliberately lacked candor in its representations to the Circuit Court hearing the case, and requests that the transfer of control applications either be designated for hearing on appropriate issues or that a revocation proceeding be instituted. USA Broadcasting responds that Urban's allegations involve a private contractual dispute. USA Broadcasting further maintains that it did not misrepresent facts to the Circuit Court and that, in any case, the allegations involve the kind of unadjudicated non-FCC misconduct that the Commission has determined is irrelevant in evaluating the character qualifications of a licensee. The Commission has long held that it is not the proper forum for the resolution of private contractual disputes and that, in particular, it will not arbitrate issues of contract interpretation not calling into question a licensee's compliance with Commission rules. See, e.g., Cope Communications, Inc., 13 FCC Rcd 14564, 14567 (1998); Speer III, 11 FCC Rcd at 18413. The dispute between USA Broadcasting affiliates and Urban involves the particular meaning of "authorized operating power" as negotiated by the parties in their affiliation agreement. It does not involve the proper definition or application of this phrase for Commission-related purposes, such as compliance with our rules or conditions. Consequently, the dispute over the interpretation of this particular provision and, thereby compliance with the affiliation agreement, is a private contractual matter that does not implicate a Commission rule, and was being litigated in a local judicial forum. The Commission has stated its willingness to honor the directives of local courts in such contractual matters, and conserve the simultaneous administration of both state and federal authority contemplated by the Supreme Court in Radio Station WOW, Inc. v. Johnson, 323 US 120, 132 (1945). See, e.g., Ninety-Two Point Seven Broadcasting, Inc., 55 RR 2d 607, 611 (1984). The Circuit Court has now ruled for USA Broadcasting on this matter, and we see no reason to further address this matter. As to whether USA Broadcasting lacked candor in the Circuit Court proceeding, the Commission does not per se evaluate misrepresentation/lack of candor in non-Commission proceedings. Instead, the Commission will only evaluate allegations of adjudicated non-FCC misconduct involving fraudulent representations to government agencies, criminal false statements or dishonesty, and broadcast-related violations of antitrust laws or other laws concerning competition. Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC at 1195-1203 (1986). The one exception involves circumstances that are "so egregious as to shock the conscience and evoke almost universal disapprobation." Id. at 1205, n.60. The arguments raised by Urban do not involve any of the specified non-FCC misconduct considered by the Commission in determining whether an applicant has the requisite character qualifications to be a Commission licensee, and the alleged misconduct falls short of "egregious" as defined by Commission precedent. See, e.g., Contemporary Media, Inc., 10 FCC Rcd 13685, 13687 n.9 (1995) (alleged pattern of child sexual abuse and assault may constitute "egregious misconduct"); and Williamsburg County Broadcasting Corp., 5 FCC Rcd 3034, 3035 (1990) (allegations of drug trafficking may constitute "egregious misconduct"). Continued Satellite Exception. Following grant of the transfer of control applications, Univision will control two full-service television stations in the New York DMA, WXTV(TV), Channel 47 (UNI), Paterson, New Jersey, and WHSE-TV, Channel 68 (HSN), Newark, New Jersey, as well as WHSI-TV, Channel 67 (HSN), Smithtown, New York, which operates as a satellite of WHSE- TV. The Commission originally granted authority to operate WHSI-TV as a satellite of WHSE- TV in December 1979. Robert Rosen, et al., 83 FCC 2d 359 (1980). The Commission has since reviewed, and granted, continued satellite operation for WHSI-TV in 1984, 1986 and 1996. Wometco Enterprises, Inc., 55 RR 2d 1545 (MMB 1984), rev. denied, 57 RR 2d (1986); and Roy M. Speer, 11 FCC Rcd 14147 (1996). Univision asserts that the material circumstances underlying the original grant of satellite authority have not changed. Univision bases its continued satellite exception request on the standards adopted in Television Satellite Stations, 6 FCC Rcd 4212, 4215 (1991) (subsequent citations omitted). Under that standard, applicants acquiring satellite stations must show that the stations meet our satellite policy at the time of the assignment or transfer. However, an applicant will be entitled to a presumption that satellite operation is in the public interest if it meets three criteria: (1) no City Grade contour overlap exists between the parent and the satellite; (2) the satellite would provide service to an underserved area; and (3) no alternative operator is ready and able either to construct or to purchase and operate the satellite as a full-service station. Id. at 4212. If an applicant cannot qualify for the presumption, we will evaluate the proposal on an ad hoc basis to determine whether other compelling circumstances warrant satellite status. Id. at 4214. The satellite meets the first criterion as Univision has supplied an engineering showing demonstrating that no City Grade overlap exists between WHSI-TV and WHSE-TV. With respect to the second criterion, Univision has demonstrated that WHSI-TV provides service to an underserved area by using our "transmission test." That test is met if there are two or fewer full- service stations licensed to a proposed satellite's community of license. No other television station is licensed to WHSI-TV's community of license, Smithtown, New York. As to the third criterion, Univision argues that "WHSI-TV's established history as a satellite, combined with the highly competitive nature of the New York television market, conclusively demonstrates that WHSI-TV is not capable of operating as a stand-alone facility and that consequently no operator" is ready and able to purchase and operate the station as such. Univision further submits the declaration of Brian Cobb, a media broker and Managing Director of Media Venture Partners, who states that WHSI-TV could not survive as a stand-alone facility because it does not provide a signal over New York City, and does not have strong financial credentials. He further states that, even were WHSI-TV able to cover New York City, it would not be able to enter into an affiliation agreement with any of the existing networks. He concludes that, given the large number of independent stations that already broadcast in the New York market, the chances of WHSI-TV's survival as an independent station would be slim. While we do not believe that this showing meets the third criterion of our "presumptive" satellite standard, we do believe that the showing is strong enough to justify continued satellite status under our ad hoc satellite procedures. We agree that, given the facts shown and the nature of the relevant market, it does not appear likely that an alternative operator would be willing to operate WHSI-TV as a full-service station. Although the station does not meet the "presumptive" satellite standard, its long history as a satellite, and its inability to serve large portions of the New York DMA, constitute "compelling circumstances" warranting satellite status. Thus, we conclude, continued operation of WHSI-TV as a satellite of WHSE-TV would serve the public interest. Accordingly, the request for continued operation of WHSI-TV as a satellite of WHSE-TV pursuant to the satellite exception to Section 73.3555 of the Commission's Rules, IS GRANTED. IT IS FURTHER ORDERED, That the "petition to deny" filed by Theodore M. White, IS DISMISSED, and, when considered as an informal objection, IS DENIED. Upon finding the applicants fully qualified and that the public interest would be served thereby, the applications to transfer control of USA Broadcasting stations WQHS-TV, Cleveland, OH, et al. (File Nos. BTCCT-20010123AAL-AAX) ARE GRANTED. Sincerely, Roy J. Stewart Chief, Mass Media Bureau cc: Jacqueline P. Cleary, Esq. Bruce A. Eisen, Esq.