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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 95-2356 In re: ) ) Petition of Nationwide Communications, Inc. ) CSR-4244-A d/b/a Eaglevision ) ) Modification of KLTJ's ADI Market) For Must Carry Purposes ) MEMORANDUM OPINION AND ORDER Adopted: August 28, 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" or "Eaglevision") seeking to modify the Houston, Texas "area of dominant influence" ("ADI") and to exclude itself from KLTJ(TV)'s television market in certain cable communities. GO, Inc., licensee of KLTJ (TV)(Ch. 22-- Galveston, TX), filed an opposition to the petition to which NCI filed a reply.. BACKGROUND 2. Pursuant to Section 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 614(h) 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 KLTJ(TV) be modified so as to relieve its 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 KLTJ(TV) is an independent television station licensed to Galveston, TX, which is approximately 45 miles from central Houston. According to NCI, KLTJ(TV) presents religious programming that "almost entirely ignores" the local issues of importance to the Houston area. 9. Turning to the statutory criteria for market modifications, NCI first addresses the historical carriage factor. Here, the operator asserts that KLTJ(TV) has never been carried on its systems and that no other area cable system carries the station's signal. NCI then argues that unlike other stations carried on the system, KLTJ(TV) does not provide programming of local interest to Houston. The operator asserts that KLTJ(TV) airs only syndicated religious programming and that the station's "Quarterly Issues/Programs Lists" reveals that only one regularly scheduled program on KLTJ is locally produced and oriented. Furthermore, KLTJ(TV) 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 KHOU(TV) and KPRC (TV) provide abundant coverage of local events, news of local interest, and locally-produced public service programming. Finally, NCI states that KLTJ(TV)'s viewership in the Houston area is insignificant. In fact, KLTJ(TV) does not meet the minimum reporting standards required to be considered part of the Houston market. 10. In opposition, KLTJ(TV) first argues that NCI's petition is moot and should be dismissed. It states that NCI previously informed KLTJ(TV) that all of its systems lie beyond the 35 mile zone applicable to Galveston and that it has no obligation to carry KLTJ(TV) in the absence of an agreement to indemnify for potential copyright costs. KLTJ(TV) questions the operator's action here asserting that it told NCI it had no interest in indemnifying for copyright costs and that it is not currently seeking carriage on NCI's systems. KLTJ(TV) also notes that there is pending before the Commission a Petition for Rulemaking filed December 3, 1993, by Pray, Inc., licensee of KVVI-TV, Baytown, Texas, which seeks amendment of Section 76.51 to hyphenate the Houston television market to include the nearby cities of Baytown, Galveston, Kate, Rosenberg, Alvin, and Conroe, Texas, each of which is the licensed community for one or more television stations. KLTJ(TV) submits that such a proceeding offers a far more efficient means of dealing with market definition issues pertaining to Houston than NCI's ad hoc approach. 11. As for the four statutory factors, KLTJ(TV) claims that NCI's arguments are distorted and disingenuous. First, the station argues it is far more than a conduit for syndicated religious programming as it also airs locally produced programming addressing the informational and other needs of Vietnamese, Chinese, and Spanish residents in the area. KLTJ(TV) also carries six locally produced Hispanic religious programs weekly, ten locally produced programs oriented toward African Americans, and several locally produced musical and variety programs. Moreover, contrary to NCI's assertion, KLTJ(TV) is currently carried on Crown Cable in the communities of Angleton, Bellville, Cleveland, Hempstead and Sealy and on Star Cable in at least ten other communities. With regard to the historical carriage factor, KLTJ(TV) asserts that failure to satisfy this factor is of little significance as Congress did not intend that non-carriage in the past would become a basis to deny otherwise mandated carriage in the future. KLTJ(TV) also claims that Congress could not have intended that Arbitron be the de facto "definer" of television markets with regard to viewership surveys. In any instance, KLTJ(TV) states that as a noncommercial station, it "is disinterested in playing the `ratings game'." 12. In its reply, NCI argues that its petition is not moot and KLTJ(TV) has failed to provide any legal basis for dismissing its filing. First, NCI notes that while the station, for the first time, announces that it is currently forbearing seeking carriage because of copyright liability, the Opposition is clearly made to defend its must carry rights. Furthermore, if the Commission were to hyphenate the market under a 76.51 proceeding, there might not be any copyright liability and it is likely that the station would again seek to assert it carriage rights. With regard to the historical carriage, NCI argues that recent carriage of the station probably occurred as a result of the must carry rules, and in any instance, hardly rises to the level of continuous carriage required under the first statutory factor. According to NCI, it is also not clear from the pleadings whether the systems carrying KLTJ(TV) are in fact located in the city of Houston. As for the station's programming showing, NCI asks why none of the alleged public interest programming KLTJ(TV) broadcasts were illustrated in the "Stations Issues/Programs Lists." Moreover, none of the listings show that the programming is actually directed at resident in Houston. 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 as Congress explicitly selected television ratings as a factor in these proceedings. ANALYSIS AND DECISION 13. As a preliminary matter, we note that KLTJ(TV) is licensed as a noncommercial educational television station ("NCE"). However, KLTJ(TV) is not considered a "qualified" NCE station under Section 615(l)(1) of the 1992 Cable Act or Section 76.55(a) of the Commission's rules because it is not eligible to receive a community service grant from the Corporation for Public Broadcasting, a point that the station does not dispute. Nevertheless, we have held that non-qualified NCEs should be treated as default commercial stations under the must carry rules. Consequently, KLTJ(TV), like commercial television stations, is subject to a deletion request by a cable operator such as NCI. 14. We also find that NCI's petition for special relief is not moot. Whether KLTJ(TV) indemnifies NCI for any copyright costs has no bearing on our decision to act on a market modification request. Rather, the choice to indemnify directly affects a station's signal carriage options on a cable system only after an ADI modification is conclusively determined by the Commission. More importantly, we note that Congress has amended Section 111 of Copyright Act of 1976 to make a television station's ADI "local" for copyright as well as for must carry. This legislative change allows KLTJ(TV), as a local station for signal carriage and copyright purposes, to request carriage on NCI's cable systems, at any point in the future, without the requirement to pay indemnification costs and without the need for the Commission to hyphenate markets. Thus, a decision in this case is of critical importance to the operator and the station because it will finally decide whether KLTJ(TV) may properly assert any signal carriage rights against NCI. 15. Turning to the merits of the petition, we deny NCI's deletion request because the operator has not provided persuasive evidence that the communities in question are not part of KLTJ(TV)'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 KLTJ(TV) 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 KLTJ(TV)'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 be "traditional" cable systems does not address the issue of whether they are within the market of KLTJ(TV). 16. Focusing on the specific factors referenced in the statute, we are unable to find merit in NCI's arguments. With respect to the question of historical carriage patterns, NCI states that it has never carried KLTJ(TV)'s signal. We believe that the historical carriage factor is not controlling in these circumstances because the 1992 Cable Act would, in effect, prevent religious 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. 17. We also find that, contrary to the belief of NCI, KLTJ(TV) does provide local coverage and service to the cable communities. We initially note that Commission records show that KLTJ(TV) places 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 fact that KLTJ(TV) provides a religious and ethnic programming service of particular interest to discrete segments of the population does not suggest that local service is not being provided. 18. 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 KLTJ(TV), 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. 19. Finally, we find NCI's arguments regarding KLTJ(TV)'s lack of ratings to be unpersuasive. We recognize that 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. ORDERING CLAUSES 20. Accordingly, IT IS ORDERED, pursuant to Section 614(c) of the Communications Act of 1934, as amended, 47 U.S.C.  534, and Section 76.59 of the Commission's Rules, 47 C.F.R.  76.59, that the "Petition for Special Relief" (CSR-4244-A) filed March 18, 1994 by NCI Services, Inc. IS DENIED. NCI Services, Inc. is therefore required to carry the signal of KLTJ(TV) on its systems serving the afformentioned 1.communities. KLTJ(TV) 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 60 days of such notification. 21. 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