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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of ) ) THE PROVIDENCE JOURNAL COMPANY ) (Transferor) ) ) and ) ) AH FINANCE COMPANY ) (Transferee) ) ) For Consent to the Transfer of Control of) File Nos. BTCCT-961018YA Licenses of Stations: ) BTCTT-961018YB KASA-TV, Santa Fe, New Mexico ) BTCCT-961018YC KMSB-TV, Tucson, Arizona ) BTCTT-961018YD-YE WCNC-TV, Charlotte, North Carolina) BTCCT-961018YF-YG WHAS-TV, Louisville, Kentucky ) BTCTTV-961018YH KING-TV, Seattle, Washington ) BTCCT-961018YI-YZ KGW(TV), Portland, Oregon ) BTCCT-961018ZA-ZG KREM-TV, Spokane, Washington ) BTCTTV-961018ZH KTVB(TV), Boise, Idaho ) BTCTT-961018ZI-ZR KHNL(TV), Honolulu, Hawaii ) BTCTTL-961018ZS KHBC-TV, Hilo, Hawaii ) BTCTTV-961018ZT-ZX KOGG(TV), Wailuku, Hawaii ) BTCTT-961018ZY MEMORANDUM OPINION AND ORDER Adopted: February 27, 1997 Released: February 28, 1997 By the Commission: 1. The Commission has before it for consideration the above-captioned 11 television, and 38 low power television and television translator station applications seeking consent to the transfer of control of The Providence Journal Company (Providence Journal) to AH Finance Company (AH Finance), a subsidiary of A. H. Belo Corporation (Belo). Providence Journal and AH Finance, along with Belo, have entered into an Agreement and Plan of Merger pursuant to which Providence Journal shall become a wholly owned subsidiary of AH Finance. A petition to deny the proposed transfer of control was filed by Virgie L. Grant-Brooks of Irving, Texas and Belo has responded. 2. Providence Journal indirectly controls the licensees of the following 11 television stations: KASA-TV, Channel 11 (IND), Santa Fe, NM; KMSB-TV, Channel 11 (FOX), Tucson, AZ; WCNC-TV, Channel 36 (NBC), Charlotte, NC; WHAS-TV, Channel 11 (ABC), Louisville, KY; KING-TV, Channel 5 (NBC), Seattle, WA; KGW(TV), Channel 8 (NBC), Portland, OR; KREM- TV, Channel 2 (CBS), Spokane, WA; KTVB(TV), Channel 7 (NBC) Boise, ID; KHNL(TV), Channel 13 (NBC) Honolulu, HI; KHBC-TV, Channel 2 (NBC), Hilo, HI and KOGG(TV), Channel 15 (NBC), Wailuku, HI. Belo, through its subsidiaries, controls seven television stations, including KIRO-TV, Seattle, WA. Because the Grade B contours of KIRO-TV and Providence Journal's Seattle station, KING-TV, overlap, Belo's acquisition of KING-TV would violate the Commission's duopoly rule, Section 73.3555(b), which proscribes common ownership of television stations whose Grade B contours overlap. Accordingly, Belo has requested a temporary six month waiver of that rule to divest KIRO-TV. Providence Journal operates stations KHBC-TV and KOGG(TV) as satellites of station KHNL(TV). Accordingly, Belo also requests Commission approval to continue operating stations KHBC-TV and KOGG(TV) as satellites of KHNL(TV). PETITION TO DENY 3. Virgie L. Grant-Brooks, a resident of Dallas, Texas, filed a petition to deny the instant transfer application. Grant-Brooks contends that the print and broadcast media outlets owned by Belo in the Dallas market engage in biased reporting of local campaign issues and of the African- American community in general. Grant-Brooks also expresses concern regarding Belo's potential lack of commitment to the communities served by its media outlets, based upon its past performance in the Dallas market print media. Grant-Brooks maintains that Belo has caused the African- American community in Dallas to be victimized by "media terrorism through the print media." In response, Belo contends that Grant-Brooks fails to meet the requirements for consideration of its objection as a petition to deny under Section 73.3584 of our rules, because the pleading (1) fails to include a claim of standing; (2) is not supported by an affidavit as required by 47 U.S.C.  309; and (3) was not served on Providence Journal or its counsel. We agree that Grant-Brooks' pleading fails to meet the requirements for consideration as a petition to deny. We will, however, consider the pleading as an informal objection pursuant to Section 73.3587 of our Rules. 4. Upon review of the material before us, we find that Grant-Brooks' contentions in this proceeding do not raise a substantial and material question of fact that would require a hearing. As we have stated in the past, and as Belo notes in its response, "the Commission does not attempt to direct licensees in the selection or presentation of specific material." Stockholders of CBS Inc., 11 FCC Rcd 3733, 3746 (1995). Further, absent "extrinsic evidence of any intentional incidents of news suppression or distortion," the Commission will not review a licensee's news judgment. American Broadcasting Companies, Inc., 83 FCC 2d 302, 305 (1985). This "extrinsic evidence" consists of that evidence outside the broadcast itself, such as written or oral instructions from station management, or outtakes. Stockholders of CBS Inc., 11 FCC Rcd at 3746. Grant-Brooks has failed to provide such evidence. With respect to Belo's operation of its current and prior newspaper holdings in Dallas, we have stated that we will take cognizance of an applicant who engages in "nonbroadcast misconduct so egregious as to shock the conscience and evoke almost universal disapprobation" Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179, 1205, n.60. However, Grant-Brooks' unsupported, generalized claim of "media terrorism" does not invoke such consideration by the Commission. DUOPOLY WAIVER 5. Because the predicted Grade B contours of KIRO-TV, Channel 7 (UPN), Seattle, WA and KING-TV, Channel 5 (NBC), Seattle, WA overlap, Belo's acquisition of KING-TV would violate the Commission's duopoly rule, Section 73.3555(b), which proscribes common ownership of television stations whose Grade B contours overlap. Accordingly, Belo has requested a temporary six-month waiver of that rule in order to divest KIRO-TV, and has filed an application to assign the station's license. 6. In support of its waiver request, Belo has submitted an engineering showing which indicates that the predicted overlap of the stations represents 100% of the service area and 100% of the population within the Grade B contour of KIRO-TV and 87% of the service area and 98% of the population within the Grade B contour of KING-TV. Both stations are licensed to Seattle, which is in the 12th ranked Seattle-Tacoma Designated Market Area (DMA), and their City Grade and Grade A contours overlap. The applicant acknowledges that a substantial overlap exists; however, it contends that the Commission has "consistently" granted temporary waivers of the duopoly rule in spite of the extent of the overlap. 7. Belo maintains that because the overlap area is served by a multitude of other media, competition and diversity within the overlap area is ensured. Belo's engineering exhibit indicates that twelve other television stations currently serve the Seattle-Tacoma market, including five VHF stations and three major network affiliates, while four more television stations are scheduled to begin operation in the near future. According to Belo, within the proposed overlap area, ten full service stations provide Grade B service and every part of the overlap receives service from at least five television stations. One station, KOMO-TV, serves the entire overlap area. In addition, 43 of the 54 radio stations licensed to communities in the Seattle-Tacoma area are commercial stations and they are held by 31 different owners. The Seattle-Tacoma DMA also has a cable penetration of 71%, ranking it ninth nationally in the number of cable television households. Further, pointing to emerging alternative media sources, Belo notes that Seattle hosts two wireless cable companies, 10 MMDS licensees and three local television stations (KING-TV, KOMO-TV and KCTS-TV) now offering programming on the Internet. Also contributing to the diversity in the market, states Belo, are fifteen daily newspapers. 8. Finally, Belo pledges that KING-TV and KIRO-TV will continue to operate separately. In addition to maintaining separate programming, each station will continue to have its own local sales and news staffs. Currently, the stations compete aggressively in news, programming and advertising. According to Belo, KIRO-TV provides eight hours per day of local news programming, while KING-TV is the leading news station in Seattle. Belo also pledges to continue to operate the stations in that vein. Belo pledges that during the period of any common ownership, the stations will continue to vigorously compete for viewers and advertising dollars. Moreover, on February 25, 1997, Belo filed an application for assignment of the license of KIRO-TV to WPXI, Inc., a wholly owned subsidiary of Cox Broadcasting, Inc (Cox). 9. In adopting the duopoly rule's fixed standard of prohibiting overlap of Grade B service contours, the Commission also acknowledged the need for "flexibility" in that rule's application, noting that waivers should be granted where rigid conformance to the rule would be "inappropriate." Multiple Ownership of Standard, FM and Television Broadcast Stations (Multiple Ownership), 45 FCC 2d 1476 n.1, recon. granted in part, 3 RR 2d 1554 (1964). To that end, the Commission has developed a set of factors to be considered when evaluating an applicant's request for waiver of the duopoly rule, including the extent of the overlap, the number of media voices available in the overlap area, the distinctness of the respective markets, the independence of the stations' operations, and the concentration of economic power resulting from the combination. See Iowa State University Broadcasting Corporation, 9 FCC Rcd 481, 487-88 (1993), aff'd sub nom. Iowans for WOI-TV, Inc. v. FCC, 50 F.3d 1096 (D.C. Cir. 1995); H&C Communications, Inc., 9 FCC Rcd 144, 146 (1993). After weighing the factors, the Commission considers any public interest benefits proposed by the applicant to determine whether, in light of the overlap, the benefits outweigh any detriment which may occur from grant of the waiver. See, e.g., Iowa State University, 9 FCC Rcd at 487-88. The Commission has found the size of the proposed overlap to be of "more critical concern" in cases involving requests for a permanent waiver of the multiple ownership rules. With regard to temporary waiver requests, such as here, the Commission is not constrained from granting a temporary waiver where circumstances "will not significantly frustrate the policies underlying the multiple ownership rules." Telemundo Group, Inc., Debtor in Possession, 10 FCC Rcd 1104, 1106 (1994)(quoting Family Television Corp., 59 RR 2d 1344, 1348 (1986)). As with any waiver, it will only be granted if the Commission concludes that the waiver is in the public interest. 10. Currently, the Commission is reexamining its broadcast television ownership policies, including the duopoly rule. In January 1995, the Commission proposed a new analytical framework within which to evaluate our broadcast television ownership rules. See Review of the Commission's Regulations Governing Television Broadcasting, Further Notice of Proposed Rule Making, 10 FCC Rcd 3524 (1995) (Television Ownership Further Notice). Subsequent to the release of that Television Ownership Further Notice, Congress directed the Commission to conduct a rulemaking proceeding to determine whether to retain, modify or eliminate existing limitations on the number of television stations that an entity may control within the same television market. See Section 202(c) of the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (Feb. 8, 1996) (Telecomm Act). In response to this Congressional directive in the Telecomm Act and to update the record, the Commission recently released the Review of the Commission's Regulations Governing Television Broadcasting, Second Further Notice of Proposed Rule Making, FCC 96-438 (released November 7, 1996) (Television Ownership Second Further Notice). In that Second Further Notice, the Commission tentatively concluded to authorize common ownership of television stations that are in separate DMAs and whose Grade A contours do not overlap, conditioned on coming into compliance with the outcome of the proceeding within six months of its conclusion. Television Ownership Second Further Notice at 57. The Commission also stated that it would be disinclined to grant waiver requests not falling into this category, absent extraordinary circumstances. Id. at 58. The applicants' waiver request is not consistent with our interim policy and we must, therefore, determine whether the requisite extraordinary circumstances warrant a waiver. We believe they do. 11. We have stated that "in situations such as multiple-station transaction[s] . . . we believe facilitating such a transaction by temporary waiver of our multiple ownership rules will 'promote commerce, encourage investment in the broadcast industry, and allow for the free transferability of broadcast licenses.'" Brissette Broadcasting Corp., 11 FCC Rcd 6319, 6325 (1996)(quoting Stockholders of CBS Inc., 11 FCC Rcd at 3744). We believe a multi-station transaction, under the circumstances present before us, weighs heavily in favor of granting a temporary waiver, notwithstanding the fact that the proposal is inconsistent with our interim waiver policy. This merger involves a total of 11 full-service television stations and 38 low power and television translator stations. While the degree of contour overlap between the two stations is nearly complete, the Seattle-Tacoma market enjoys a high level of diversity, with multiple competing media outlets. Specifically, five other VHF television stations are licensed to the market, including three major network affiliates, and four construction permits have been issued for future operations. Additionally, all or part of the overlap area is served by seven commercial and three noncommercial educational full service television stations. The market is also served by 54 radio stations licensed to 31 separate owners, cable television systems with a penetration of 71%, and two wireless cable systems and, according to our own staff review, five MDS licensees. Moreover, Belo has unequivocally committed to divest KIRO-TV and, to that end, has filed an application to assign the station's license to WPXI, Inc. Under these particular circumstances, we are persuaded that a brief period of common ownership of KING-TV and KIRO-TV, to permit orderly divestiture of KIRO- TV, would not so adversely affect competition and diversity in a well-served market such as Seattle as to outweigh the benefits of accommodating the reasonable business needs of this multi-station, multi-market transaction. Accordingly, we will grant a temporary waiver pending consummation of the sale of KIRO-TV to WPXI, Inc. pursuant to the application for Commission consent to such sale filed on February 25, 1997. We also expect Belo to abide by its pledge to maintain independent operations of these television stations during its common ownership. SATELLITE PROPOSALS 13. We now turn to the proposal of Belo to continue operating stations KHBC-TV, Hilo, Hawaii and KOGG(TV), Wailuku, Hawaii as satellites of KHNL(TV), Honolulu, Hawaii. Belo seeks to maintain the satellite status of these stations after the proposed transfer of control. The Commission requires all applicants seeking to transfer existing satellite stations and to continue those stations' satellite status to demonstrate that the stations meet our satellite policy at the time of transfer of control. See Television Satellite Stations, 6 FCC Rcd 4212, 4215 (1991), on reconsideration Second Further Notice of Proposed Rulemaking in MM Docket No. 87-8, 6 FCC Rcd 5010 (1991), on further reconsideration Review of the Commission's Regulations Governing Television Broadcasting, 10 FCC Rcd 3524 (1995). Pursuant to the Commission's satellite policy, an applicant is entitled to a presumption that its proposed 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 proposed 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 grant of the application. Id. at 4214. While both of these satellite stations do not meet each of the three presumptive criteria, we find compelling circumstances exist that warrant continued satellite authority. 14. With regard to the first criterion of the presumption, Belo has submitted an engineering study which demonstrates that the City Grade contours of KHNL(TV) and its two satellites, KOGG(TV) and KHBC-TV, do not overlap. Moreover, the engineering study demonstrates that there is no City Grade contour overlap between KOGG(TV) and KHBC-TV, the two satellite stations. Thus, both proposed satellite operations meet the first component of the presumption. 15. With respect to the second criterion, Belo has demonstrated that the area where satellite station KHBC-TV is located is underserved by using our "reception" test. That test deems an area as underserved if 25 percent or more of the area located within the satellite's Grade B contour, but outside the parent's Grade B contour, receives four or fewer services other than the service provided by the satellite. Id. at 4215. The engineering exhibit indicates that four or fewer services are received in 36 percent of that portion of KHBC's Grade B contour located outside the KHNL(TV) Grade B contour. Thus, KHBC-TV serves an "underserved" area. Turning to KOGG- TV, Belo acknowledges that the station does not serve an "underserved" area as defined by the Commission in Television Satellite Stations. However, Belo argues that the unusual terrain and geographic circumstances existing in the State of Hawaii constitute compelling circumstances warranting continued satellite authority. According to Belo, because no other non-satellite commercial television station provides service to the KOGG(TV) coverage area, the termination of the station's satellite status could result in Wailuku losing service which would not otherwise be provided by a stand-alone station. 16. As to the third criterion to qualify for the presumption, an applicant must demonstrate that no alternative operator is ready and able to construct or to purchase and operate the proposed satellite as a full-service stand-alone station. In this regard, Belo has submitted a statement by Raymond J. Timothy of Furman Selz, LLC, an investment banking firm with "extensive" experience in media transactions. In that statement, Mr. Timothy, who notes that he was an advisor in a recent assignment of the license of a satellite station in Hawaii, maintains that neither KOGG(TV) nor KHBC-TV could operate as stand-alone stations. Pointing to the nine commercial television stations which serve Honolulu, the area's dominant population, retail and financial center, Mr. Timothy believes that the significant number of competitors in the market would be an impediment to both of the satellite stations' success as stand-alone stations. In fact, several of these nine stations have satellites that provide service to the outlying areas. Further, in Mr. Timothy's opinion, the Honolulu DMA has a very large number of commercial television stations given that the market served has fewer than 400,000 television households. In Mr. Timothy's estimation, even if KOGG(TV) and KHBC-TV served a greater portion of the market, no existing network would enter into an affiliation agreement providing any meaningful compensation, and as independent stations, the chance of survival would be low. Thus, Mr. Timothy concludes that in order for KOGG(TV) and KHBC-TV to survive and to provide service to their respective communities, they must continue to operate as satellites of KHNL(TV). After review of the representations made herein, we believe that the applicants have adequately demonstrated the unlikelihood of finding an alternative operator willing and able to operate KOGG(TV) and KHBC-TV as full-service stand-alone facilities. Thus, we conclude that the applicants have satisfied the third criterion. 17. Based upon the above representations, Belo has demonstrated that KHBC-TV complies with the three-part "presumptive" satellite exemption standard and we shall grant it continued satellite status. With respect to KOGG(TV), the station's satellite operation fails to meet the second criterion of the presumptive standard. However, as we have noted in the past, we believe satellite status is warranted in Wailuku and Hilo because, "Hawaii's geographical constraints and limited population outside of Honolulu constitute. . . compelling circumstances." BBC License Subsidiary, 10 FCC Rcd 10968, 10976 (1995). Specifically, the eight islands comprising the State of Hawaii are separated by large expanses of water and mountainous terrain. As a result, the nine stand-alone stations in Hawaii, all licensed to Honolulu, serve the islands through a structure of satellite stations. The eleven other full-power television stations in the State of Hawaii are satellite stations. Thus, the termination of continued satellite status to KOGG(TV) could deprive Wailuku of service that would not likely be provided by a stand-alone operation. Given the unique situation in the State of Hawaii outlined above, as well as KOGG(TV)'s satisfaction of the first and third criteria of the presumptive standard, grant of continued satellite authority is warranted. See BBC License Subsidiary, 10 FCC Rcd at 10976. Accordingly, we conclude that allowing continued operation of KOGG(TV) and KHBC(TV) as satellites of KHNL(TV) would be in the public interest. CONCLUSION 18. Having determined that each of the applicants is qualified in all respects, we conclude that grant of the proposed transfer of control would serve the public interest, convenience and necessity. Accordingly, IT IS ORDERED, That the petition to deny filed by Virgie L. Grant- Brooks IS DISMISSED and when considered as an informal objection IS DENIED. 19. IT IS FURTHER ORDERED, That the request for a temporary waiver of the Commission's television duopoly rule, Section 73.3555(b), to permit the common ownership and/or control of Seattle, Washington television stations KING-TV and KIRO-TV IS GRANTED, pending consummation of the sale of KIRO-TV to WPXI, Inc., pursuant to the application for Commission consent to such sale filed on February 25, 1997. In the event this transaction becomes impossible to consummate or the parties elect not to consummate it, A. H. Finance Company must immediately submit alternative divestiture plans and seek further authorization to continue its common ownership of KIRO-TV and KING-TV. If consummation of the sale of KIRO-TV to WPXI, Inc. does not occur within the 60 days provided for such consummation in FCC Form 732, the parties are directed to inform the Commission of their plans to come into compliance with the broadcast ownership rules. 20. IT IS FURTHER ORDERED, That the requests for continued operation of KHBC- TV, Hilo, Hawaii and KOGG(TV), Wailuku, Hawaii as satellites of KHNL(TV), Honolulu, Hawaii, pursuant to the satellite exception to Section 73.3555 of the Commission's Rules, ARE GRANTED 21. IT IS FURTHER ORDERED, That the applications for transfer of control of The Providence Journal Company's aforementioned television, low power television and television translator broadcast stations to AH Finance Company, ARE GRANTED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary