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File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** 1.$//Denial of NCI's petition for special relief, DA 95-____//$ $/300.534 Carriage of local commercial television signals/$ $/76.7 Special relief and must-carry complaint procedures/$ $/76.59 Modification of television markets/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-2355 In re: ) ) Petition of Nationwide Communications, Inc. ) CSR-4243-A d/b/a EagleVision) ) For Modification of Television Broadcast ) Station KVVV's ADI ) MEMORANDUM OPINION AND ORDER Adopted: November 13, 1995 Released: November 28, 1995 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. Before the Commission is a petition for special relief filed by Nationwide Communications, Inc., d/b/a EagleVision ("NCI") seeking to modify the Houston, Texas "area of dominant influence" ("ADI") and to exclude certain cable communities from the market of Television Broadcast Station KVVV (Ind., Channel 57), Baytown, Texas. VVI Baytown, Inc. ("KVVV"), the station's licensee, filed an opposition to the petition to which NCI filed a reply. BACKGRO UND 2. Pursuant to 4 of the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") and implementing rules adopted by the Commission in its Report and Order in MM Docket 92-259, commercial television broadcast stations are entitled to assert mandatory carriage rights on cable systems located within the station's market. A station's market for this purpose is its "area of dominant influence" or ADI as defined by the Arbitron audience research organization. An ADI is a geographic market designation that defines each television market exclusive of others, based on measured viewing patterns. Essentially, each county in the United States is allocated to a market based on which home-market stations receive a preponderance of total viewing hours in the county. For purposes of this calculation, both over-the-air and cable television viewing are included. 3. Under the Act, however, the Commission is also directed to consider changes in ADI areas. Section 4 provides that the Commission may: with respect to a particular television broadcast station, include additional communities within its television market or exclude communities from such station's television market to better effectuate the purposes of this section. In considering such requests, the Act provides that: the Commission shall afford particular attention to the value of localism by taking into account such factors as -- (I) whether the station, or other stations located in the same area, have been historically carried on the cable system or systems within such community; (II) whether the television station provides coverage or other local service to such community; (III) whether any other television station that is eligible to be carried by a cable system in such community in fulfillment of the requirements of this section provides news coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; and (IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable system or systems in such community. 4. The legislative history of this provision indicates that: where the presumption in favor of ADI carriage would result in cable subscribers losing access to local stations because they are outside the ADI in which a local cable system operates, the FCC may make an adjustment to include or exclude particular communities from a television station's market consistent with Congress' objective to ensure that television stations be carried in the areas which they serve and which form their economic market. * * * * * [This subsection] establishes certain criteria which the Commission shall consider in acting on requests to modify the geographic area in which stations have signal carriage rights. These factors are not intended to be exclusive, but may be used to demonstrate that a community is part of a particular station's market. 5. The Commission provided guidance in its Report and Order in MM Docket 92- 259, supra, to aid decision making in these matters, as follows: For example, the historical carriage of the station could be illustrated by the submission of documents listing the cable system's channel line-up (e.g., rate cards) for a period of years. To show that the station provides coverage or other local service to the cable community (factor 2), parties may demonstrate that the station places at least a Grade B coverage contour over the cable community or is located close to the community in terms of mileage. Coverage of news or other programming of interest to the community could be demonstrated by program logs or other descriptions of local program offerings. The final factor concerns viewing patterns in the cable community in cable and noncable homes. Audience data clearly provide appropriate evidence about this factor. In this regard, we note that surveys such as those used to demonstrate significantly viewed status could be useful. However, since this factor requires us to evaluate viewing on a community basis for cable and noncable homes, and significantly viewed surveys typically measure viewing only in noncable households, such surveys may need to be supplemented with additional data concerning viewing in cable homes. 6. In adopting rules to implement this provision, the Commission indicated that changes requested should be considered on a community-by-community basis rather than on a county-by-county basis and that they should be treated as specific to particular stations rather than applicable in common to all stations in the market. The rules further provide, in accordance with the requirements of the Act, that a station not be deleted from carriage during the pendency of an ADI change request. 7. Adding communities to a station's ADI generally entitles that station to insist on cable carriage in those communities. However, this right is subject to several conditions: 1) a cable system operator is generally required to devote no more than one-third of its activated channel capacity to compliance with the mandatory signal carriage obligations, 2) the station is responsible for delivering a good quality signal to the principal headend of the system, 3) indemnification may be required for any increase in copyright liability resulting from carriage, and 4) the system operator is not required to carry the signal of any station whose signal substantially duplicates the signal of any other local signal carried or the signals of more than one local station affiliated with a particular broadcast network. If, pursuant to these requirements, a system operator elects to carry the signal of only a single affiliate of a broadcast network, it is obliged to carry the affiliate from within the ADI whose city of license is closest to the principal headend of the cable system. Accordingly, based on the specific circumstances involved, the addition of communities to a station's ADI may guarantee it cable carriage and specific channel position rights; simply provide the system operator with an expanded list of must-carry signals from which to choose, i.e., when it has used up its channel capacity mandated for broadcast signals carriage, or determined which of duplicating network affiliated stations are entitled to carriage priority. MARKET FACTS AND ARGUMENTS OF THE PARTIES 8. In its petition for special relief, NCI requests that the television market of KVVV be modified so as to relieve NCI's systems from any obligation to carry that station. The operator explains that the systems are not "traditional" cable systems. Rather, NCI provides cable service solely to multiple dwelling unit building complexes in and around Houston. NCI serves approximately 3% of the households (approximately 15,700 subscribers) in the Houston ADI with its cable systems. TCI and Time Warner provide cable service to the rest of the market. NCI then states that KVVV is an independent television station licensed to Baytown, Texas, which is approximately 23 miles from Houston. According to the operator, KVVV does not provide local programming to Houston subscribers. 9. Turning to the statutory criteria for market modifications, NCI first addresses the historic carriage factor. The operator asserts that even though KVVV began operation in 1988, it has never been carried on NCI's systems and that no other area cable system carries the station's signal. NCI then argues that unlike other stations carried on the system, KVVV does not provide programming of local interest to Houston. The operator asserts that 99 percent of KVVV's programming consists of non-local commercial sales presentations. Moreover, KVVV broadcasts only two hours per week of non-home shopping programming, of which 1 1/2 hours are locally produced. Furthermore, KVVV does not produce or air any local news whatsoever, and does not cover local sporting events or regularly cover community activities. Referring to the third factor, NCI states that its systems carry the signals of at least eight, and in some cases up to thirteen, local commercial broadcast stations. These stations, such as Stations KHOU-TV (CBS, Channel 11) and KPRC-TV (NBC, Channel 2), both Houston, Texas, provide abundant coverage of local events, news of local interest, and locally-produced public service programming. Finally, NCI states that KVVV's viewership in the Houston area is insignificant. In fact, KVVV does not meet the minimum audience reporting standards required to be considered part of the Houston market. 10. In opposition, KVVV first claims that NCI's petition to remove its cable systems from KVVV's market is not authorized by the 1992 Cable Act. The station argues that NCI does not seek to remove any specific community from KVVV's market, but rather aims to remove only its systems without identifying how KVVV's service to the viewers connected to those systems differs in any way from its service to other viewers in Harris County. With regard to the four statutory factors, KVVV claims that NCI has failed to overcome the strong presumption of cable carriage in the 1992 Cable Act. First, KVVV argues that neither the first or fourth statutory factor are relevant in this case. KVVV explains that the station is being carried on several TCI systems in the Houston ADI and on other area cable systems as well. Furthermore, prior lack of carriage was not, as NCI suggests, due to viewer disinterest but rather was attributable to KVVV's limited broadcast schedule. As for local service, KVVV maintains that its Grade B contour covers the communities at issue. With regard to its programming, KVVV states that the station's program format is being revised and it plans to offer a "substantial" service focusing on the needs and interests of viewers throughout its service area, in addition to the home shopping programming of its parent, ValueVision International. In a later pleading, KVVV explains that it has recently completed construction of a new studio for the production of expanded news and public affairs programming covering its service area. 11. In its reply, NCI first notes that nothing in the 1992 Cable Act or the Commission's rules defines the meaning of "community" for the purposes of market modification proceedings. Nevertheless, it argues that it is logical to read "communities" to mean "community units" as defined in 76.5(dd) of the Commission's rules. The operator states that its interpretation is consistent with this rule as it mirrors Commission practice to regularly list community unit numbers in conjunction with market modification petitions for special relief placed on public notice. With regard to the historical carriage, NCI notes that KVVV makes no mention as to how long the station has been carried on the systems it mentions in its opposition. As for the station's programming showing, NCI reiterates that KVVV does not provide substantial local service to the communities under the second factor. Moreover, the Commission cannot credit the station for local interest programming it plans to air sometime in the future. The operator also argues that the presumption of service through Grade B coverage is rebutted by its showing that the station in fact does not present locally oriented programming. Turning to the third factor, NCI argues that the enhancement criterion, demonstrating that other stations in the market provide local service, should apply equally to cable operators when petitioning to delete communities from a station's market. Finally, NCI asserts that the station's lack of viewership cannot be overlooked, a point that KVVV not only failed to contest but even failed to address. ANALYSIS AND DECISION 12. We deny NCI's deletion request because the operator has not provided persuasive evidence that the communities in question are not part of KVVV's market based on the four statutory or any other relevant factors. The ADI market change process incorporated into the Communications Act is not intended to be a process whereby cable operators may seek relief from the mandatory signal carriage obligations apart from the question of whether a change in the market area involved is warranted. Here the arguments presented by the petitioner do not assist us in deciding whether a change is appropriate -- whether particular communities should be included or excluded from the market -- but rather are directed more generally to whether carriage of the signal of KVVV can be avoided because of its program content, regardless of the specific location of the cable communities. In this case it appears that the operator is simply seeking to avoid the statutory requirements because it filed its deletion petition based on KVVV's programming format. In this regard, NCI's request is similar to a request previously denied involving the Houston market area. Our decision is buttressed by the fact that NCI's cable operations are scattered throughout the City of Houston but its arguments do not distinguish among them even though they are not uniformly distant in terms of geography from the television station in question. Nor can it be shown that there are technological impediments which prevent the station's signal from being received at any of the operator's several headends. The argument that these are not "traditional" cable systems does not address the issue of whether they are within the market of KVVV. 13. Given the general structure of the market, including the fact that Baytown is only 24 miles distant from the center of the market, its inclusion not only within the ADI of the market but within the same standard metropolitan statistical area, the high degree of overlap between the service area of KVVV and all of the other stations licensed to Houston, and the absence an alternative ADI market area with which KVVV might properly be associated, it appears at the outset that KVVV is logically part of this ADI as are the cable communities in question. 14. Focusing on the specific factors referenced in the statute, we are also unable to find merit in NCI's arguments. With respect to the question of historic carriage patterns, NCI states that it has never carried KVVV's signal. We believe that the historic carriage factor is not controlling in these circumstances because the 1992 Cable Act would, in effect, prevent home shopping and other specialty stations which cable systems had previously declined to carry, from ever being carried. We note that the 1992 Cable Act was adopted in part to cure past discriminatory signal carriage practices and to grant the deletion request in this instance would obviate Congressional intent. 15. We also find that, contrary to the belief of NCI, KVVV does provide local coverage and service to the cable communities. We initially note that KVVV appears to place at least a City Grade contour over the City of Houston. We have previously held in a similar case in the Houston ADI that such coverage is an indication of local service. The point that KVVV provides a home shopping programming service of particular interest to discrete segments of the population does not suggest that local service is not being provided. In fact, the Commission has specifically affirmed that home shopping stations may serve the public interest because, among other reasons, they provide "an important service to viewers who either have difficulty obtaining or do not otherwise wish to purchase goods in a more traditional manner." 16. Furthermore, we do not believe that NCI's carriage of other local stations is sufficient to justify exclusion of its systems from the above referenced communities. NCI has not sufficiently demonstrated why it is necessary to remove itself from its own ADI vis-a- vis KVVV, yet remain in the same market with regard to the station's competitors. We find that NCI's petition is inconsistent with Congressional intent which clearly states that the market modification policy was not provided as a means for cable systems to avoid their must carry obligations. 17. We also find NCI's arguments regarding KVVV's lack of ratings to be unpersuasive. We recognize that home shopping stations, like religious stations, (also known as "specialty stations"), are capable of "offer[ing] desirable diversity of programming . . . ," yet typically attract limited audiences. We continue to believe, as the Commission did in its specialty station rules, that the fact that such stations attract a smaller audience share must be taken into account in determining the equities concerning a station's right to cable carriage. 18. Finally, we note that the Commission previously resolved a must carry complaint involving NCI and KVVV's predecessor, KRTW. In its complaint, KRTW asserted that NCI declined to carry its signal even though the station placed a city grade contour over the City of Houston and was qualified for carriage in all other respects. NCI argued that it did not have to carry KRTW's signal because the station was substantially duplicative of another home shopping station signal already carried on the systems. Moreover, NCI asserted that ten of its systems have reached their quota of must carry signals. Based upon the information presented, the Commission ordered NCI to carry KRTW's signal on all of its cable systems except for those which devoted the maximum amount of channel space to the carriage of commercial broadcast station signals that is required by the 1992 Cable Act. Our decision in this Memorandum Opinion and Order does not disturb that ruling. NCI is still required to carry KVVV's signal on all of its cable systems except for those which have already met their must carry quota. ORDERING CLAUSES 19. Accordingly, IT IS ORDERED, pursuant to 614(c) of the Communications Act of 1934, as amended (47 U.S.C. 534), and 76.59 of the Commission's Rules (47 C.F.R. 76.59), that the "Petition for Special Relief" (CSR-4243-A) filed March 18, 1994 by NCI Services, Inc. IS DENIED. Nationwide Communications, Inc. d/b/a EagleVision is therefore required to carry the signal of KVVV on its systems serving the aforementioned communities consistent with paragraph 18, supra. KVVV shall notify NCI in writing of its carriage and channel position elections, (76.56, 76.57, 76.64(f) of the Commission's Rules), within thirty (30) days of the release date of this Memorandum Opinion and Order. NCI shall come into compliance with the applicable rules within sixty (60) days of such notification. 20. This action is taken pursuant to authority delegated by 0.321 of the Commission's Rules (47 C.F.R. 0.321). FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau