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/Bureaus/Miscellaneous/Public_Notices/ ***************************************************************** ******** Before the Federal Communications Commission Washington, D.C. 20554 In re: ) ) NEPSK, Inc. ) CSR-4652-X ) Petition for waiver of the cross-) ownership rules.) MEMORANDUM OPINION AND ORDER Adopted: April 5, 1996 Released: April 12, 1996 By the Cable Services Bureau: 1. On November 13, 1995, NEPSK, Inc. (NEPSK), licensee of WAGM-TV, Presque Isle, Maine, requested a temporary waiver of Section 76.501(a) of the Commission's rules, 47 C.F.R. 76.501(a), so that it could consummate acquisition of five commonly owned and operated cable television systems, one of which provides service within the Grade B contour of WAGM-TV. Section 76.501(a) prohibits a cable operator from owning a television station whose Grade B contour covers any portion of the community served by the operator's cable system. NEPSK requests the waiver for a period of time not to exceed eighteen months from the date of consummation of the sale. 2. In support of its request, NEPSK states that it has entered into an agreement to purchase five cable television systems, all located in northern Maine, and that they are to be acquired from the same seller in a single transaction. The five systems are as follows: Community Subscribers Houses passed Channel capacity Channel use Danforth 169 256 36 20 Howland 784 1,354 36 32 Medway 438 538 36 28 Monticello 451 682 54 27 Oakfield 250 318 36 23 3. A waiver is necessary, NEPSK explains, because although four of the communities lie entirely outside of the WAGM-TV Grade B service contour, Monticello is within the Grade B contour. Not only does Monticello occupy only a small area in the southern part of the contour, NEPSK asserts, but it includes fewer than 22% of the total number of subscribers in the five systems, and the Monticello system represents a proportional 22.5% of the allocated value of the assets to be acquired by NEPSK. Furthermore, NEPSK claims that the proposed waiver will not create undue media concentration because Monticello receives service from ten broadcast stations other than WAGM-TV, including three television stations, two AM stations, and five FM stations. In addition, NEPSK asserts, the Monticello system carries a number of broadcast stations, both off-the-air and via satellite, apart from WAGM-TV. Also, NEPSK points out that a number of daily and weekly newspapers are available in the Monticello area. To further demonstrate that the proposed waiver will not impair competition or diversity, NEPSK represents that it will not engage in any joint marketing or sales arrangements between the Monticello system and WAGM-TV, other than the relationship routinely required in connection with carriage of the WAGM-TV signal. Finally, NEPSK concludes that grant of its request will allow it to come into compliance with the Commission's cross-ownership prohibition in an orderly fashion, thus avoiding a "fire sale" of the Monticello system, and would be consistent with Commission holdings that such forced sales are not in the public interest. 4. In Golden West Associates, L.P., 59 RR 2d 125 (1985), and its progeny, the Commission, in appropriate circumstances, has held that the public interest would be served by permitting licensees eighteen months to divest cable systems that were within the Grade B contour of co-owned broadcast stations. The Commission has stated: [W]e do not believe that Congress could have intended to require the shutdown of an operating cable system and loss of service to the public where a substantial sale is involved and where the cable system, as here, is a very small part of the transaction. There is no public benefit we perceive in removing cable service to the four communities involved here until a buyer is found. Furthermore, given the abundance of media serving the [market,] we do not believe that any undue harm or concentration will result from permitting the [acquiror] to divest itself of its cable interests after its acquisition of [the acquiree] has occurred. Nor do we believe that Congress intended to require "fire sales" as the result of the need to divest properties quickly after Commission approval of complex transfers, but before consummation of the transaction. In view of the foregoing, and given the nature of the facilities, we believe that an 18-month period of time, from the date of consummation of the sale, would be sufficient for [the acquiror] to divest itself of the cable systems. 5. In view of the foregoing, the Bureau believes that the public interest will be served by granting NEPSK's request for an eighteen-month period after consummation of the transaction to sell its Monticello cable system. This action comports with the aforenoted Commission precedent and also permits NEPSK to avoid a "fire sale" of its Monticello assets or a forced reduction in cable service. NEPSK has demonstrated that the Monticello cable system is a small part of the overall transaction and that Monticello, the only community within WAGM-TV's Grade B contour, occupies a small portion of the station's service area. Moreover, NEPSK has shown that there is an abundance of other media, including broadcast stations and newspapers, also serving the Monticello area. We therefore conclude that NEPSK's waiver request is reasonable and should be granted. 6. ACCORDINGLY, IT IS ORDERED that, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, the request for temporary waiver, filed November 13, 1995, by NEPSK, Inc., IS GRANTED, and that Section 76.501(a) of the Commission's rules, 47 C.F.R. 76.501(a) IS WAIVED to the extent indicated above. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau