******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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: ) ) TCI Cablevision of Texas, Inc., )CSR 4997-A ) For Modification of the Television Market of ) Station KTFH, Conroe, Texas ) ) and ) ) Paxson Houston License, Inc., )CSR 4978-M ) Must-Carry Complaint Concerning ) Carriage of Television Broadcast Station ) KTFH, Conroe, Texas ) MEMORANDUM OPINION AND ORDER Adopted: August 7, 1997Released: August 13, 1997 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1.TCI Cablevision of Texas, Inc. ("TCI"), operator of a cable television system serving Clute, Freeport, Lake Jackson, and Richmond, Texas and unincorporated portions of Brazoria County, Texas ("the Communities), filed the captioned petition which seeks to exclude the Communities from the market of television station KTFH (Channel 49), Conroe, Texas ("KTFH"). Paxson Houston License, Inc., ("Paxson"), licensee of KTFH filed an opposition to TCI's petition, and TCI filed a reply. Paxson also filed a must carry complaint seeking carriage of KTFH on TCI's cable systems serving the Communities, which TCI opposed and which we resolve herein. BACKGROUND 2.Pursuant to Section 614 of the Communications Act of 1934, as amended by the 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.The Commission is also directed to consider changes in market areas. Section 614(h)(1)(C) further 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, Section 614(h)(1)(C)(ii) 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. 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. MARKET FACTS AND ARGUMENTS OF THE PARTIES 6.The Communities at issue in this proceeding are located in Brazoria County, Texas, and include unincorporated areas of Brazoria County. They are located in the southern portion of the Houston, Texas ADI near the Gulf of Mexico. KTFH's city of license, Conroe, Texas, is located in Conroe County, in the northern portion of the Houston ADI, approximately 85 miles from the Communities. TCI contends this distance alone justifies modification of KTFH's television market. 7.TCI asserts further that it satisfies each of the four market modification criteria set forth in the 1992 Cable Act. With respect to the historical carriage factor, TCI claims that it has never carried KTFH, although the station has been in operation since 1989. TCI contends that because KTFH has not been carried on its systems and has not received significant local ratings in the Communities, excluding the Communities from KTFH's market would not disrupt established viewing patterns nor deprive the station of any existing cable audience, and would therefore be consistent with Congressional intent. 8.TCI asserts that KTFH does not provide signal coverage to the Communities, which are all located beyond the Grade B contour of KTFH. TCI relies on our decision in Montgomery Cablevision, L.P. d/b/a Cable TV Montgomery, 10 FCC Rcd 2732 (CSB 1995) ("Montgomery"), in support of its market modification request. TCI notes that in Montgomery, the Commission excluded from the markets of other stations communities that are substantially less distant than KTFH is from the Communities at issue here. 9.TCI contends that KTFH's program format offers no significant local programming to the Communities. TCI asserts that the Houston edition of TV Guide does not list KTFH's programming, but states instead, in the April 12-18, 1997 issue, that KTFH "offers infomercials, specialty programs, and childrens programs." TCI says this description is consistent with the description of the "Infomall TV Network" stations, which include KTFH, found on the "Paxson Web Site" on the Internet -- "Paxson has assembled a television network, inTV, dedicated to broadcasting long-form paid programming or infomercials, as well as selected political, religious and ethnic programming." TCI contends Paxson stations nationwide, including KTFH, utilize the inTV format, which has no specific nexus to the Communities served by TCI. 10.TCI contends its system carries numerous Houston stations which provide ample local service to, and coverage of, the communities in question. TCI claims these other Houston stations provide coverage of local news and sporting events, including that of Houston professional sports teams, by means of at least a Grade B signal. TCI argues that even if KTFH were to provide locally oriented programming to the Communities, the coverage afforded by other local stations would lessen any particular benefits associated with carriage of KTFH. 11.Finally, TCI contends that KTFH is not generally viewed in either cable or non-cable households in Brazoria County where the Communities are located. TCI submits a study conducted by Media Strategies, which indicated an inability to find any ratings for KTFH in either cable or non-cable households in Brazoria County. 12.In opposition, Paxson, which acquired KTFH on March 1, 1995, asserts that it is an experienced operator of independent television stations oowning facilities in numerous markets. Paxson contends that TCI seeks modification of the station's ADI in order to avoid its obligations under the must- carry rules. Paxson contends that the must-carry rules were designed, in large part, to protect the small, vulnerable, independent commercial stations from being denied cable carriage so that they could compete effectively for viewership and advertising revenues. Paxson argues that TCI's petition seeks to delete the very type of station that the must-carry rules were designed to protect. Paxson asserts in essence that the must-carry rules require carriage of such a television station throughout the station's ADI. Under the must carry regime of the 1992 Cable Act, Paxson asserts that KTFH, which is located in the Houston ADI with TCI's cable systems, is entitled to a strong presumption in favor of carriage on TCI's cable systems serving those Communities. 13.Paxson argues that Section 614(h)(1)(C)(i) of the Act authorizes the Commission to modify ADI markets "to better effectuate the purposes of this section," which Paxson states are to ensure cable carriage of local stations so that they may originate local programming, and to counteract cable operators' economic incentive to delete stations which compete for advertising revenue with the operators. Paxson asserts that the burden is on the cable operator seeking a community deletion, not on the affected station, to justify market modification by proving that such deletion would "better effectuate" the purposes of the must- carry rules. Paxson contends that TCI has failed to meet this burden. Paxson cites legislative history of the 1992 Cable Act stating that deletion of communities from a station's ADI is appropriate where the presumption in favor of ADI carriage would result in cable subscribers losing access to local stations because they are outside of the ADI. Paxson argues that grant of TCI's petition "would subvert the clear intent of Congress that stations like KTFH be assured an opportunity to compete throughout their local television market ... ." 14.Paxson cites Turner Broadcasting Systems, Inc. v. FCC, 117 S. Ct 1174 (1997) ("Turner"), in which the Supreme Court validated the mandatory must carry provisions. Paxson argues that the Court in Turner emphasized the design of the must carry provisions to preserve the benefits of free, over-the-air broadcast television, to promote widespread dissemination of information in a multiplicity of sources, and to promote fair competition in the television programming market. Paxson argues further that the Court recognized that absent the must carry provisions significant numbers of broadcast stations may be denied carriage, resulting in loss of viewers and advertising revenues, substantial deterioration, and ultimate failure. According to Paxson, the Court's reasoning in Turner compels a denial of the market exclusion request in this case, because KTFH must compete in the Houston ADI with other powerful, centrally located Houston stations, including all four of the major network affiliates, that are able to place a Grade B or better signal over the Communities and that are carried on TCI's cable systems. Paxson contends, too, that denial of carriage would undermine years of Commission efforts to enable UHF stations to compete with larger more powerful VHF stations and undermine Commission objectives of promoting a healthy, diverse, and competitive local broadcast market in the Houston ADI. 15.Paxson argues that Congress expressly considered and rejected a mileage based or similar geographic approach for determining the scope of a station's must carry market. It points to changes in the language of the must carry provisions that developed during the legislative processes leading to the current must carry provisions, in which must carry rights are based on a station's ADI, rather than mileage or station signal contours. Thus, Paxson argues, the must carry regime clearly anticipates that broadcast stations would be provided carriage on cable systems located outside their Grade B signal contours. Paxson admits that Section 614(h)(1)(B)(iii) provides an exception to must carry throughout a station's ADI, but only where a station fails to provide a good quality signal to a cable system headend and refuses to assume the cost of delivering a quality signal to such headend. Paxson contends that the Congress thus intended that a station be carried on systems within its ADI, so long as the station pays to amplify or otherwise enhance its signal level sufficiently. In further support of this position, Paxson points to the modification of the definition of a broadcast signal as "local" throughout a station's ADI for purposes of the Copyright Act, by which Congress sought to ensure that broadcasters would not be deprived of ADI-wide coverage deemed necessary to foster competition and diversity and to enhance the viability of broadcasters. 16.Paxson contends that the relief urged by TCI and followed in recent market modification decisions has resulted in abandonment of the ADI-wide carriage in favor of a Grade B approach rejected by Congress. It submits that anything less than ADI-wide coverage flies in the face of the diverse, competitive broadcast market envisioned by the Congress, advocated by the Commission, and validated by the Supreme Court in Turner. 17.Paxson claims it airs programming of local interest to the Communities by means of a pioneering format that combines "program-length presentations by local and national businesses and community organizations with religious and local public affairs programming." Specifically, Paxson says KTFH airs presentations by businesses and community organizations during daytime hours, syndicated programming during prime-time hours, and religious programming through the night. It claims these programs offer a valuable and cost effective local platform to businesses and community organizations. Paxson further states that KTFH presents a locally-produced public affairs program entitled "Houston Informed," which highlights local groups and topics of community interest, "Texas Financial News," featuring a different local company each week, and "Texas Chinese TV," a locally produced Chinese language program covering local and international news along with two other Asian language programs. Paxson also mentions programming presented by local automobile dealers and travel agencies, and asserts that presentation of these programs demonstrates a commitment to fulfilling the goals of Congress by providing programming designed to meet the needs and interests of viewers throughout the Houston ADI, including the Communities at issue here. 18.Paxson asserts that KTFH's must carry rights in the Communities should not be eliminated because the station has not historically been carried on TCI's cable systems, claiming that failure to establish historic carriage should not be given great weight. Paxson argues that affording decisional weight to lack of carriage in the context of small, specialty stations like KTFH would have the effect of preventing weaker stations from ever being carried. Paxson describes recent episodes of "Houston Informed" as examples of KTFH programs that address educational, political, societal and public affairs issues. Paxson argues that TCI's carriage of other stations which provide local coverage does not support TCI's request to delete the Communities from KTFH's market. Paxson contends the Commission does not use cable carriage of other local stations as a bar to a market exclusion request when other stations are shown to serve the communities at issue, but only to enhance a station's market inclusion request where other stations do not serve the community at issue. Finally, Paxson says the Commission recognizes that the specialty format of stations like KTFH is capable of offering desirable diversity of programming despite typically attracting limited audiences. Paxson says evidence of lack of viewing of KTFH in the Communities therefore should not be deemed significant for that reason, and also for the reason that such stations have been found by the Commission to enjoy significant viewership. 19.In reply, TCI reiterates that KTFH has not been historically carried on its systems, and that the Communities served by its systems are distant, some 85 miles, from Conroe, Texas, KTFH's city of license and beyond KTFH's Grade B contour. TCI also notes again that several Houston stations provide Grade B or better coverage to the Communities and are carried on its systems, thus providing local news and sporting events of interest to the Communities. In contrast, TCI points out that KTFH is not generally viewable in these communities by cable or off-the-air. TCI contends that the four part market modification test fully supports grant of the petition, because KTFH has no local nexus to the Communities. 20.TCI argues that Paxson's extended discussion of the must carry regulatory provisions, of its legislative history requirements, and of any presumption of carriage is largely irrelevant. TCI says such irrelevance stems from the fact that only one common link exists between KTFH and the Communities served by TCI - namely, the Houston ADI. But that single link does not of itself justify forcing a cable operator to carry any station located in the ADI, TCI contends, because the broadcast signal carriage rules do not transform an otherwise local station into a regional super station automatically carried in every community within an ADI. TCI believes such a concept would render the statutory market modification provisions superfluous. TCI further contends that Paxson interprets the legislative history of the must carry provision too narrowly, by suggesting in essence that a community could never be excluded from a station's market. It argues that the legislative history selectively cited by Paxson does not define the entire scope of the market modifications provisions; instead, the legislative history further indicates that the market modification provisions reflect Congressional recognition that some communities may be so far removed from a station located within the same ADI that the communities cannot be deemed part of the station's market. 21.TCI contends further that the 1994 changes to the definition of "local" under the Copyright Act also does not entitle stations automatically to carriage throughout an ADI as Paxson suggests. Since the Congress left the market modification provisions intact when it modified the Copyright Act, TCI argues it is consistent with both statutory provisions to construe the market modification provisions as allowing stations to add or delete communities from their ADI to reflect their true marketplace, thus providing a vehicle for ensuring that Arbitron's ADI assignments did not create anomalous results when applied in the must carry context. 22.TCI argues that Paxson failed to refute the arguments for deletion under the four market modification factors. TCI stresses that KTFH has never been carried on its systems. In response to the station's argument that KTFH's lack of historical carriage should not be controlling nor be given great weight, TCI asserts that the Commission has consistently held that historical carriage will be considered along with the other three market modification factors which, in this instance, weigh in favor of TCI's request. TCI further asserts that Paxson failed to show that either "Houston Hour" or "Texas Financial News" produced locally for KTFH are tailored for the Communities. Even if they are so tailored, TCI claims such offerings are de minimus at best, amounting to an estimated one percent of KTFH's entire broadcast. TCI also argues that the foreign language programming carried by KTFH is not automatically of local interest to speakers of that language any more than is English language programming, absent any showing, as is the case here, of the local aspects of such programming. TCI notes that the Commission has indicated that a station may not be considered local solely by airing some occasional programming associated with some of the communities in question and that such occasional programming does not serve as a quid pro quo that guarantees carriage. TCI further argues that KTFH's programming format, which, according to the station, provides an effective advertising platform for local businesses and community organizations, is not shown to be local programming. TCI observes also that KTFH has virtually no audience share in the Communities. Finally, TCI points out that KTFH is owned by a major television station group owner, who by its own account is an experienced operator of independent television stations with facilities in numerous markets, and is therefore not the struggling independent station suggested by Paxson's opposition. ANALYSIS AND DECISION 23.We shall grant TCI's request for modification of the market of KTFH, Conroe, Texas, by deleting from that market the Communities served by TCI's cable system. TCI's deletion petition is a legitimate request to redraw station market boundaries to make them congruous with market realities. Based on the geography and the four statutory factors, we find that the Communities in issue here are sufficiently removed from KTFH that they ought not be deemed part of the station's market for mandatory carriage purposes. Specifically, TCI has made a persuasive case that Clute, Freeport, and Richmond, Texas and unincorporated portions of Brazoria County, Texas, which are located in the southern portion of the Houston ADI, are not logically part of the market of KTFH, which is located in the northern portion of the Houston ADI approximately 85 miles distant. Our decision herein comports with, and helps effectuate, Section 614 of the 1992 Cable Act, so that the market anomalies presented in this case could be properly rectified as contemplated by Congress when it included the market modification provisions in Section 614(h) 24.Turning to the four-part market modification test set forth in Section 614, it is not disputed that KTFH has no history of carriage with respect to any of the communities in question. Regarding the provision of locally oriented programming, we agree with TCI that the amount of local interest programming provided to residents of the Communities by KTFH is an insufficient basis on which to find a commonality of market. Currently, KTFH airs "Houston Hour" or "Texas Financial News" produced locally for KTFH, which were not shown to be specifically tailored for the Communities as opposed to the Houston area at large. In any event, these offerings are de minimus at best, amounting to only a small portion of KTFH's entire broadcast. Although Paxson expresses hope that some portion of KTFH's air time devoted to program- length presentations will be acquired by national and local businesses and community organizations within two years, the station provides no specific examples showing that any such presentations are tailored to the communities in question today. We cannot conclude that a station must be considered "local," as Congress intended that term to mean in Section 614 of the 1992 Cable Act, solely by airing some occasional programming potentially associated with some of the communities in question. Paxson asks that we take into consideration its future programming commitments. For the purposes of determining whether a station is local to a specific market at a given point in time, our focus is on the programming actually being aired. We are unable to base our market modification decision on programming that may or may not be aired at some future date. Programming is considered in the context of Section 614 proceedings only insofar as it serves to demonstrate the scope of a station's market and service area, not as a quid pro quo that guarantees carriage or as an obligation that must be met to obtain carriage. The lack of actual, targeted programming in this case weighs against KTFH in our analysis. 25.Regarding viewing patterns, again it is not disputed that KTFH has virtually no over-the-air or cable audience in the communities in question. For that reason, excluding the Communities from KTFH's market would not disrupt established viewing patterns nor deprive the station of any existing cable audience. Another factor to consider in market deletion cases is the availability of other broadcasters in the market. We reject Paxson's argument that carriage of other local stations should not be considered in evaluating a cable operator's deletion request. The notion that this factor should not be examined in the instant proceeding is contrary to the statutory directive. The 1992 Cable Act specifically provides that, in considering requests to either include or exclude communities from a station's television market, the Commission shall take into account factors such as the carriage of other local stations by a cable operator serving the communities at issue. We have also stated, and reiterate here, that where a cable operator is seeking to delete a station's mandatory carriage rights in certain communities within its ADI, and it is clear that the station is not providing local service to those communities, the issue of local coverage by other stations becomes a factor to which we will give greater weight than in cases where a party is seeking to add communities. Paxson insists that such reasoning is inconsistent with a prior deletion case in which we held that "we do not believe the enhancement criterion should be used by a cable operator to bolster its request to delete communities from a station's television market whenever it could show that other stations in the market serve the cable communities." In using such language, we were asserting that a cable operator seeking to delete communities from a station's market could not simply point to the fact that it carried other local stations and, by that fact alone, satisfy its burden of proof. In other words, a cable operator's deletion request will not automatically be granted whenever it can show carriage of other local stations. Rather, carriage of other local stations may be used as an enhancement factor to support a cable operator's deletion request when other evidence shows the communities at issue to be outside of the station's market. In the present case, TCI carries numerous network affiliated and independent stations licensed to communities in the Houston ADI which provide coverage of local news and events, and other evidence of record discussed herein shows the Communities served by TCI to be outside KTFH's market. In particular, KTFH's Grade B contour falls significantly short of the Communities at issue in this case, and its programming is not viewed in any measurable amount in the Communities, which are geographically distant, approximately 85 miles and on the other side of the Houston ADI, from KTFH's city of license, Conroe, Texas. Local service availability from a technical point of view and geography are factors that must be given significant weight in delineating the station's market in this particular case. 26.Paxson argues that there is a strong presumption of carriage throughout a station's ADI. This argument invites us to ignore the four statutory factors set forth in the market modification provisions and to rely instead on this presumption. For instance, as noted above, Paxson claims the availability of other local stations in the market should not be considered in this case. In addition, Paxson discounts the lack of historical carriage and non-existent viewership as insignificant to our decision. Section 614(h) of the 1992 Cable Act, however, specifically and unambiguously directs the Commission, in considering requests for market modification, to afford particular attention to the value of localism by taking into account these factors. We have previously observed that the must carry rules "were not intended to transform an otherwise local station into a regional 'super station' that must be automatically carried in every single community in an ADI ... ." Paxson says the only circumstance in which deletion of a local station would enhance localism is where a cable system is unable, in the absence of deletion, to carry the signal of another station that is outside of the ADI market and that provides demonstrably more local service. We find these interpretations of Section 614(h) of the 1992 Cable Act and the Commission's implementing regulations too restrictive and without a sufficient basis in either the legislative history or the wording of the statute. The statute, on its face, does not limit market deletion requests only to those situations where an out-of-the-market station is more deserving of carriage than an in-market station. There is also no language in the legislative history of Section 614(h) directly supporting Paxson's viewpoint, nor is there any in the Commission's rules. To the contrary, Paxson ignores Congress' directive allowing either broadcasters or cable operators to ask for market modifications so that a station's ADI could better reflect the economic market at hand. MUST-CARRY COMPLAINT 27.Section 614 of the Communications Act and the Commission's implementing rules permit stations to assert mandatory carriage rights on cable systems located within their market. We agree with Paxson that the must-carry rules seek to ensure cable carriage of local stations in order to strengthen their economic viability and thereby allow for greater diversity in programming. The prerequisite for asserting must-carry rights with respect to a particular cable system, however, is that the operator serve communities in the station's market or ADI. Paxson filed a must-carry complaint against TCI seeking carriage on the cable operator's systems which serve Clute, Freeport, and Richmond, Texas and Brazoria County, Texas. The communities of Clute, Freeport, and Richmond, Texas and Brazoria County, Texas served by these systems have been deleted from KTFH's market by this Memorandum Opinion and Order. Because we have granted TCI's petition to delete these communities from KTFH's market, the associated complaint filed by Paxson for mandatory carriage of KTFH is rendered moot. ORDERING CLAUSES 28.Accordingly, IT IS ORDERED, pursuant to 614(h) 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-4997-A) filed on behalf of TCI Cablevision of Texas, Inc. IS GRANTED. 29.IT IS FURTHER ORDERED that the Must-Carry Complaint (CSR-4978-M) filed by Paxson Houston License, Inc., licensee of television station KTFH, on March 19, 1997, IS DISMISSED. 30.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