NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file how2ftp. File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $//Grant of KWHD's petition to amend 76.51, DA 95-2024//$ $/76.51 Amendment of major television markets/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-2024 In the Matter of ) ) Amendment of Section 76.51 ) CS Docket No. 94-44 of the Commission's Rules ) to Include Castle Rock, Colorado ) in the Denver, Colorado ) Television Market ) REPORT AND ORDER Adopted: September 21, 1995 Released: September 29, 1995 By the Deputy Chief, Cable Services Bureau: 1. Before the Commission is the Notice of Proposed Rule Making in the captioned proceeding, issued in response to a petition filed by LeSea Broadcasting Corporation, licensee of television station KWHD(TV), channel 53 (Independent), Castle Rock, Colorado. The Notice proposed to amend Section 76.51 of the Commission's Rules, to change the designation of the Denver, Colorado television market to "Denver-Castle Rock, Colorado." No comments in opposition to this proposal have been filed. BACKGROUND 2. Section 76.51 of the Commission's Rules enumerates the top 100 television markets and the designated communities within those markets. Among other things, this market list is used to determine the scope of territorial exclusivity rights that television broadcast stations may purchase and, in addition, may help define the scope of compulsory copyright license liability for cable operators in certain circumstances. Certain cable television syndicated exclusivity and network nonduplication rights are also determined by the presence of broadcast station communities of license on this list. Some of the markets consist of more than one named community (a "hyphenated market"). Such "hyphenation" of a market is based on the premise that stations licensed to any of the named communities in the hyphenated market do, in fact, compete with all stations licensed to such communities. Market hyphenation "helps equalize competition" where portions of the market are located beyond the Grade B contours of some stations in the area yet the stations compete for economic support. 3. Section 4 of the Cable Television Consumer Protection and Competition Act of 1992 ("Cable Act"), which amended Section 614 of the Communications Act of 1934, as amended ("Act"), requires the Commission to make revisions needed to update the list of top 100 television markets and their designated communities in Section 76.51 of the Commission's Rules. RULE MAKING COMMENTS 4. The petitioner contends that KWHD in Castle Rock competes directly with television stations in the Denver market for audience share and advertising revenues. Although Castle Rock is located inside the Denver "area of dominant influence" ("ADI"), the petitioner argues that because Castle Rock is not a designated community in the above market, KWHD is considered a "distant signal" for purposes of compulsory copyright license liability if carried on cable systems more than 35 miles from Castle Rock. According to the petitioner, the consequence of being classified as a "distant signal" is that cable systems will have to pay significant copyright royalties in order to carry KWHD, and KWHD, in turn, will have to indemnify the cable systems for these royalties. In contrast, stations licensed to communities specifically designated in Section 76.51 are considered local for all cable systems within the 35-miles zones of the listed communities in a given hyphenated market and are not subject to copyright liability. The petitioner asserts that because KWHD may have to pay copyright fees attendant to its carriage as a "distant signal" that stations in Denver do not, KWHD is disadvantaged in its competition with these stations. 5. In support of its proposal, the petitioner states that it meets all of the criteria stipulated by the Commission for redesignation of the hyphenated market. The petitioner contends that Castle Rock is sufficiently proximate to Denver to be considered part of the Denver market. According to the petitioner, Castle Rock is approximately 20 miles south of Denver. The petitioner maintains that because of this geographic proximity, Castle Rock and Denver have shared economic, social and cultural interests which link them together as a single television market. The petitioner submits a contour map showing that KWHD places a Grade B signal over all of Denver and its principal suburbs and the station's coverage area substantially overlap with the signal contours of other stations in the Denver ADI. To further support its contention that KWHD competes directly with Denver market stations and is an integral part of the Denver ADI, the petitioner asserts that KWHD is widely recognized as a Denver market station. In particular, the petitioner notes the following: Denver newspapers regularly report news items from Castle Rock, and television listings of both major Denver newspapers include the KWHD program schedule; local print media clearly view Castle Rock as part of the Denver market; and program syndicators charge KWHD Denver market rates for programming. In addition, the petitioner states that KWHD carries exclusive broadcast of 72 weekly programs not currently carried on the cable systems, including five children's programs; 26 hours per week of locally produced programming; coverage of area high school sporting events; coverage of WAC Conference (local college conference) football and basketball; and local programming featuring activities of area government agencies, events, charities, and other non-profit organizations. The petitioner urges the Commission to add Castle Rock to the Denver market in order to redress what the petitioner perceives as a competitive imbalance between KWHD and stations licensed to Denver. DISCUSSION 6. A "hyphenated market" has been described by the Commission as a television market that contains more than one major population center supporting all stations in the market, with competing stations licensed to different cities within the market area. In evaluating past requests for hyphenation of a market, the Commission has considered the following as relevant to its examination: (1) the distance between the existing designated communities and the community proposed to be added to the designation; (2) whether cable carriage, if afforded to the subject station, would extend to areas beyond its Grade B signal coverage area; (3) the presence of a clear showing of a particularized need by the station requesting the change of market designation; and (4) an indication of benefit to the public from the proposed change. Each of these factors helps the Commission to evaluate individual market conditions consistent "with the underlying competitive purpose of the market hyphenation rule to delineate areas where stations can and do, both actually and logically, compete." 7. Based on the facts presented here, we believe that a case for redesignation of the subject market has been set forth so that this proposal should be adopted. It appears from the information before us that television stations licensed to Denver and Castle Rock do compete for programming, audience and advertisers in the proposed combined market area, and that sufficient evidence has been presented to demonstrate commonality between the proposed community to be added to the market designation and the market as a whole. In addition, no oppositions to the proposed re-hyphenation have been filed. 8. We note that the issue raised by the petitioner regarding KWHD's copyright license liability has largely been resolved with the passage of the Satellite Home Viewer Act of 1994, which amended Section 111(f) of title 17, United States Code. Under this Act, a station located within the same ADI as a cable system is no longer considered a "distant signal" on that system for purposes of compulsory copyright license liability and, therefore, is not subject to the additional copyright fees attendant to "distant signal" carriage within the market. Applying the Act to the facts of this proceeding, KWHD would not be considered a "distant signal" if carried on cable systems located in the Denver ADI and, therefore, would not face additional copyright fees relative to other stations located within the same ADI. Nevertheless, we find that the equalization of the regulatory status of KWHD with stations in Denver through the inclusion of Castle Rock as a named community in the market is warranted given that KWHD competes with these stations for programming, audience and advertisers. Such a rationalization of the competitive situation appears to be the public benefit which congress anticipated by instructing the Commission, in Section 614(f) of the Cable Television Consumer Protection and Competition Act of 1992, to make necessary revisions to update the market list. 9. This proceeding is not intended to address the specific mandatory cable carriage, syndicated exclusivity or network nonduplication obligations of individual cable systems. Redesignation of the market reflects in the rules the general competitive situation that in fact exists in the local area, allowing the application of the more specific rules, including those relating to "area of dominant influence" changes, to be addressed from the perspective of a properly defined market area. Accordingly, the proposed rule change will be adopted. 10. Accordingly, IT IS ORDERED, that effective [30 days after publication in Federal Register], Section 76.51 of the Commission's Rules IS AMENDED to include Castle Rock, Colorado, as follows: Denver-Castle Rock, Colorado 11. IT IS FURTHER ORDERED, that this proceeding IS TERMINATED. 12. This action is taken by the Cable Services Bureau pursuant to authority delegated by Section 0.321 of the Commissions rules. 47 C.F.R. 0.321. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau