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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: ) ) Paxson San Jose License, Inc. ) CSR-5032-A ) For Modification of Station KLXV-TV's ADI) MEMORANDUM OPINION AND ORDER Adopted: October 27, 1997 Released: October 30, 1997 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. Paxson San Jose License, Inc., licensee of Station KLXV-TV (Channel 65), San Jose, California, has filed a petition to add various cable communities in the California Counties of San Benito, Santa Cruz, and Monterey to KLXV-TV's area of dominant influence (or "ADI") insofar as mandatory carriage of the station is concerned. United Cable Television of Santa Cruz, Inc. and UACC Midwest, Inc., operators of cable television systems serving some of the specified cable communities (the "Operators"), have filed a consolidated opposition to this petition, to which KLXV-TV has replied. BACKGROUND 2. Pursuant to 614 of the Communications Act and implementing rules adopted by the Commission in its Report and Order in MM Docket 92-259, a commercial television broadcast station is 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 market areas. Section 614(h)(1)(C) 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 No. 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 requested changes 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. MARKET FACTS AND THE PARTIES' ARGUMENTS 7. Station KLXV-TV is licensed to San Jose, which is in Santa Clara County and is part of the San Francisco-Oakland-San Jose, California ADI. The specified cable communities in San Benito, Santa Cruz, and Monterey Counties are all assigned to the Salinas-Monterey, California ADI. Santa Clara County is adjacent to Santa Cruz County, on Santa Clara's southwestern border. Adjacent to Santa Cruz County is Monterey County, which is on Santa Cruz's southern border, and San Benito County is adjacent to Santa Clara County's southern border. According to Nielsen's 1995 County/Coverage Study KLXV-TV had no reported viewing shares, either off-air or on cable, in any of the three counties where the specified cable communities are located. However, KLXV-TV's transmitter is located twenty miles South of San Jose in the Santa Cruz Mountains, so its Grade A contour covers all of the cable communities in Santa Cruz County, and it places a Grade B or better contour over the remaining cable communities in San Benito and Monterey Counties. 8. Citing the Bureau's decision in KSBW License, Inc., KLXV-TV contends that its circumstances are virtually identical to those of KSBW, which was granted permission to add eleven specified cable communities located in Santa Clara County, California to its Salinas-Monterey California ADI for must-carry purposes. Like KLXV-TV, KSBW also transmits from the Santa Cruz Mountains, and its service contour is similar to that of KLXV-TV. According to KLXV-TV, it actually places a City Grade contour over all the designated communities in Santa Cruz County, and the rest of the specified cable communities receive a Grade B or better signal, which is sufficient under Commission precedent to establish that it provides local service to the designated cable communities. Station KLXV-TV adds that it and KSBW contend for viewers and for advertising revenue from the same potential audience. KLXV-TV notes that, as an NBC affiliate, KSBW has been able to attract significant ratings and carriage outside its ADI, but that the Bureau has previously held that the ability of other local stations entitled to assert mandatory carriage rights to provide coverage or other local service to the specified cable communities ought not to preclude another station's petition to add those communities to its market, citing Panhandle Telecasting Co. and Channel 56 of Orlando, Inc. Given KLXV-TV's unique programming format, the station contends that the Bureau ought to discount the fact that it has not had historic carriage in the cable communities, because this is the type of station that Congress intended to protect from cable systems' adverse carriage decisions by enacting the must-carry provisions. Similarly, KLXV- TV argues that the Bureau previously has recognized that home shopping and specialty format stations have traditionally had smaller audiences, so ratings are of little probative value in cases like this, citing Channel 56 of Orlando, Inc. According to KLXV-TV, forty percent of its program length presentations are purchased by organizations and by businesses in communities where the station has carriage rights. Noting that 43% of San Benito County is Hispanic, as well as 32% of Monterey County and 18.3% of Santa Cruz County, KLXV-TV adds that it airs a program length presentation in Spanish concerning how to operate computers. During the ski season, KLXV-TV states that it also broadcasts a "Mountain Report" on conditions each Thursday between 6:30 pm and 7:00 pm, while it airs a "Tahoe Report" between 7:30 am and 8:00 am Thursdays in the summer. Other recent episodes of its weekly series "Bay Area Profile" included programs on Ebonics, adult illiteracy, and medicinal marijuana (which featured a women's group from Santa Cruz). The station's other weekly series, "Stuff," recently featured programs concerning women's self-defense, the California Home School Network, bilingual education in California, and Proposition 209 (relative to ending affirmative action in California for State funded programs). According to KLXV-TV, its programming establishes a diverse, independent voice of substantial value in the local media market; it adds that grant of its ADI addition request will enable it to devote additional resources to developing program content targeted specifically to meet the needs of its entire television market, including the specified cable communities. 9. In response, the Operators distinguish the Bureau's prior decision in KSBW License, Inc. noting that in that case, the station had significant ratings, as well as a long history of carriage in the cable communities at issue. The Operators state that in the present case, KLXV-TV's lack of viewing and carriage since it began operations in 1986 is because its programming is not attractive to those communities and because it has been assigned to a different ADI. In addition, the Operators note that initial strength studies at their Santa Cruz headend in Scotts Valley on July 22, 1997 indicated that it is unlikely that KLXV-TV provides a good quality off-air signal to any of the communities served by that headend. Similarly, another signal study performed on July 20, 1997 indicated that FM microwave links would be necessary to provide an adequate and consistent picture quality between the station's transmitter and the Operators' pick up site across Monterey Bay. The Operators add that the station provides no programming with any specific nexus to the cable communities. Instead, they say, KLXV-TV uses the same infomercial format as do all of Paxson's other stations nationwide. The Operators contend that even the station's "Bay Area Profile" series appears actually to focus on the San Francisco area North of San Jose, while the other series, "Stuff," focuses on the northern California region. Likewise, the seasonal "Tahoe Report"and "Mountain Report" concern geographic areas that are located about 200 miles from the specified cable communities. In addition, the programs only amount to one percent of KLXV-TV's broadcast day, which is insufficient to satisfy the local coverage factor in any event, according to the Operators. The Operators also note that KLXV-TV has not explained the relevance of its Persian language programming to the designated cable communities, and the Operators contend that it is undisputed that they currently carry other stations that provide local programming to the designated cable communities. Therefore, KLXV-TV is not entitled to any benefit as an enhancement criterion for providing a service that other local stations do not, according to the Operators. Moreover, the Operators argue that, at the very least, if a decision is made to modify KLXV-TV's ADI based on its Grade B contour which results from placing its antenna twenty miles South of its city of license, then the station should also be required to relinquish any retransmission or must-carry rights outside its Grade B contour in the San Francisco-Oakland-San Jose ADI. 10. Noting that Scotts Valley is at the base of the Santa Cruz Mountains, KLXV-TV submits signal strength measurements taken August 1, 1997 in support of its assertion that it has a consistent, high quality signal in the City of Santa Cruz, as well as in other portions of Santa Cruz County. The station also notes that KSBW's transmitter is in the same vicinity as KLXV-TV's transmitter, and that Salinas is KSBW's city of license, so it is obviously considered to be a local station there. In addition, KLXV- TV submits more signal strength measurements taken August 4, 1997 in support of its contention that residents in Monterey County also receive a consistent, high quality signal from it. The station adds that it places a City Grade contour over the majority of the specified cable communities in Monterey County, and it notes that no precedent has been cited in which the Commission denied a market modification request to a station having City Grade signal quality over-the-air in a community. According to KLXV- TV, the relevant issue in this proceeding is its service to the cable communities, not its signal quality at the cable systems' headends. The station contends that it provides a diverse range of programming geared toward the communities it serves, and that it also offers a cost-effective platform for local businesses and community and minority organizations to communicate with area residents. The station adds that no minimum local programming requirement for mandatory carriage has ever been established by the Commission. In addition, KLXV-TV notes that 78% of television households subscribe to cable in the Monterey-Salinas designated market area (or "DMA"), so that off-air ratings are not very relevant there. Finally, KLXV-TV contends that by granting KSBW carriage rights in Santa Clara County, the Commission has already effectively determined that the cable communities at issue herein are part of the same economic market. Therefore, denying KLXV-TV mandatory carriage and the chance to compete for revenues and for viewership in these areas would violate the highly diverse, pro-competition goals that the must-carry rules were designed to promote. Citing the Bureau's decision in Horizon Broadcasting Corporation, KLXV-TV also notes that there is no support either in the Commission's rules or in the Communications Act which even suggests that a station's carriage rights within its own ADI could be adversely impacted by the outcome of a separate market modification proceeding, such as the instant case. ANALYSIS AND DECISION 11. We shall grant KLXV-TV's petition for market modification. The evidence submitted, evaluated pursuant to the four statutory and other relevant factors, persuades us that the communities herein are properly considered part of the station's ADI. With regard to the first statutory factor, we note that historical carriage is not by itself controlling in this particular circumstance, because if it were found to be controlling that would, in effect, prevent newer or weaker stations from ever being entitled to carriage, contrary to the policy of the statute. 12. With respect to the second statutory factor, we note that a station's local service to cable communities can be measured, among other ways, by the coverage of its contour, as well as by the proximity of the station to the subject communities. The fact that KLXV-TV's Grade A contour currently encompasses all of the specified cable communities in Santa Cruz County, and that its Grade B or better contour covers the remaining designated cable communities in San Benito and in Monterey Counties is compelling evidence that KLXV-TV provides service to the specified cable communities. Moreover, we note that home shopping formats are not incompatible with local appeal, and we recognize that such specialty programming traditionally has drawn smaller audiences. The Commission has specifically noted that home shopping stations may serve the public interest because, among other things, 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." Also, as we have previously stated, when it comes to resolving signal carriage complaints or modifying television markets under our special relief process, we are not in a position to weigh the merits of a particular station's format. We also note that KLXV-TV's transmitter site is actually located in the same approximate geographic area as is Salinas station KSBW's, thus indicating that the market served by both stations is, in fact, essentially the same. 13. With regard to the third statutory factor--whether other stations eligible to be carried serve the communities in question--in general, we do not believe that Congress intended this third criterion to operate as a bar to a station's ADI claim whenever other stations could also be shown to serve the communities at issue. Rather, we believe that this criterion was intended to enhance a station 's claim where it could be shown that other stations do not serve the communities at issue. 14. Although KLXV-TV has no measurable viewing in the specified cable communities, we are not convinced that negligible ratings provide reason enough to deny its market modification request. We recognize that home shopping stations, such as KLXV-TV, like religious or foreign language stations (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. 15. Thus, considering the totality of facts and circumstances in this case, we are convinced that KLXV-TV's television market should be modified to included the cable communities specified in the California Counties of San Benito, Santa Cruz, and Monterey. Previous decisions relating to broadcast service in this area, including both the adoption of the "home county" exception to the ADI carriage criteria discussed with relation to San Jose station KNTV(TV) by the Commission in its Report and Order implementing the carriage rules and the Bureau's decision relating to carriage of KSBW(TV), Salinas in Santa Clara County (involving a mirror image of the facts in this proceeding) strongly support grant of the requested relief. 16. The suggestion that, if KLXV-TV is granted additional carriage rights in the Salinas- Monterey ADI, it should lose its retransmission and carriage rights in the San Francisco-Oakland-San Jose ADI is not a matter that can be addressed in the context of this proceeding. ORDERING CLAUSES 17. 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-5032-A), filed June 13, 1997, on behalf of Paxson San Jose License, Inc. IS GRANTED. KLXV-TV shall notify the relevant cable systems 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 Order. The affected cable systems shall come into compliance with the applicable rules within sixty (60) days of such notification. 18. This action is taken pursuant to authority delegated by 0.321 of the Commission's Rules. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau