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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 ) ) Insight Communications Company, L.P. ) and ) CSR-4801-X Young Broadcasting Inc. ) and ) CSR-5107-X Petition for Special Relief ) Requesting Waiver of ) 47 C.F.R.  76.501(a) ) MEMORANDUM OPINION AND ORDER Adopted: November 21, 1997 Released: November 21, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1. On September 24, 1997, Insight Communications Company, L.P. ("Insight") filed a petition requesting two permanent waivers of Section 76.501(a) of the Commission's Rules, which prohibits cross-ownership of a cable system and a television broadcast station when the station's predicted Grade B contour overlaps some or all of the cable system's service area. Alternatively, Insight sought an extension of the temporary waiver granted to Young Broadcasting Inc. ("Young") on November 15, 1996 with respect to KCAL-TV (Los Angeles, California) and a new temporary waiver with respect to WTVO-TV (Rockford, Illinois). On November 18, 1997, Insight, joined by Young, filed an Amended Petition for Special Relief (herein "Amended Petition") withdrawing Insight's original request and seeking instead only an extension of the temporary waiver until January 31, 1998. The petition is unopposed. BACKGROUND AND ARGUMENTS 2. In connection with Young's acquisition in 1996 of Fidelity Television, Inc., the licensee of KCAL-TV (Los Angeles), Young petitioned the Commission and was granted a temporary waiver of the cable/broadcast television cross-ownership rule to provide Insight twelve months to divest cable systems serving the California communities of Claremont, Artesia, Bell, and Cudahy. The cross- ownership conflict arose because Insight's President and Chief Executive Officer, Michael S. Willner, is also an outside director of Young. Willner's position as a director of Young, licensee of KCAL-TV, creates a cross-ownership conflict with Insight's ownership of cable systems within KCAL-TV's predicted Grade B contour. The Bureau granted a twelve month waiver to allow Insight a reasonable period of time to divest the cable systems, or, if Insight was unable to divest the systems within twelve months, Young was required to notify the Commission that Willner had resigned from Young's Board of Directors. This temporary waiver expires on November 23, 1997. 3. Insight's petition initially requested a waiver with respect to KCAL-TV and the California cable systems that are the subject of the existing waiver and to address an anticipated cross-ownership conflict that would arise when Insight consummates acquisition of the Rockford, Illinois cable system. In Illinois, Willner's position as a director of Young, licensee of WTVO-TV (Rockford), would create a cross-ownership conflict with Insight's ownership of cable systems within WTVO-TV's predicted Grade B contour. Insight's petition requested either a permanent waiver of the cross-ownership rule or a temporary waiver conditioned on the outcome of the Commission's review of the cross-ownership rule. The Amended Petition requests, with respect to KCAL-TV and the California cable systems, an extension of the temporary waiver for 69 days, until January 31, 1998. Young has joined with Insight in the Amended Petition. They contend that this additional time is necessary to enable Mr. Willner to remain an outside director of Young until completion of a confidential corporate transaction. The waiver request with respect to WTVO-TV and the Rockford cable system is now withdrawn. 4. Insight and Young state that Willner is the only outside director of Young with extensive media experience and that he has been the supervising outside director of a Young corporate transaction, which is in the final stages of execution. They further state they had expected the transaction would be completed before the expiration of the temporary waiver, but that unanticipated delays will postpone completion of the transaction until the end of December or soon thereafter. Insight and Young contend that it would be greatly disruptive to this transaction if Willner had to resign from the Board when the temporary waiver expires on November 23, 1997. 5. Insight and Young further assert that because the Young transaction has no direct bearing on either KCAL-TV or WTVO-TV, granting a short extension of the waiver would permit Young to complete a significant transaction without harm to the policies underlying the cross-ownership rule. They note that Willner holds no other position in or relationship to Young or its subsidiaries. Insight and Young aver that Willner will be replaced as a director of Young no later than January 31, 1998. DISCUSSION 6. Section 76.501 of the Commission's Rules prohibits the common ownership and/or control of a television station and a co-located cable television system. This regulatory restriction was first implemented in 1970 and later codified into a statutory requirement by the Cable Communications Policy Act of 1984. The statutory ban was recently repealed by the Telecommunications Act of 1996. The Commission's rule, however, is still in effect. Prior to codification of Section 76.501 by Congress in 1984, the Commission, on a number of occasions, granted special relief regarding the rule on both a permanent and temporary basis. During the time the statutory ban was in effect, the Commission granted temporary relief in contemplated divestiture situations, based on the belief that reasonable accommodations may be made to avoid the risk of "fire sales." Since the repeal, the Commission retains the authority to grant both temporary and permanent relief regarding Section 76.501. 7. When considering a request for a temporary waiver of the cross-ownership rule, the Commission considers factors including the abundance of media in the market, the avoidance of "fire sales," and the size of the overall transaction and weighs these factors to determine whether the temporary waiver would cause undue harm to the public interest. We believe that Insight and Young have demonstrated sufficiently that the public interest would not be harmed by granting the relief requested to allow Willner to remain on the Board of Directors of Young for a short period of time while Young's corporate transaction is completed. 8. Applying each of the factors the Commission has used to allow other licensees a limited period of time to divest cable systems or broadcast stations when faced with a prohibited cross-ownership situation, we note first that the Los Angeles market is one of the most diverse in the nation. Second, the goal of avoiding a fire sale in the divestiture of a cable system is analogous to Petitioners' request that we not derail a significant corporate transaction by compelling Willner's immediate resignation. Similarly, as to the third factor, the overall significance to Young of Willner's participation is great and certain compared with the minor and uncertain effect of a brief extension of an existing temporary waiver. 9. We note also that in Young's first Petition for Special Relief, it sought an 18 month waiver, which we reduced to 12 months because Young had not justified its need for more than 12 months to divest the California cable systems. With this Amended Petition, Young and Insight have justified the need for additional time; which will result in a total waiver period of just over 14 months. 10. Finally, in granting this extension, we are cognizant that Insight has withdrawn its request for a permanent waiver of the cross-ownership rule, not only for the existing cross-ownership conflict in the Los Angeles market but also in the Rockford, Illinois market. We further understand that following completion of the Young corporate transaction, Willner will resign as an outside director of Young thus eliminating the cross-ownership conflict that prompted Insight's Petition. CONCLUSION 11. For the reasons stated above, we grant Young an extension of the temporary waiver of the broadcast/cable television cross-ownership rule until January 31, 1998 or Willner's resignation from the Young Board of Directors, whichever event occurs first. The waiver is conditioned on Willner's insulation from any direct involvement in the management of KCAL-TV or WTVO-TV and his agreement to refrain from holding any official position in KCAL-TV or WTVO-TV. In addition, Young shall notify the Commission, on or before January 31, 1998, that Willner has resigned from the Young Board of Directors. ORDERING CLAUSE 12. Accordingly, IT IS ORDERED that the captioned petition for special relief filed by Insight Communications Company, L.P. and Young Broadcasting Inc. requesting a temporary waiver of the Commission's broadcast/cable television cross-ownership rule, Section 76.501(a), IS GRANTED, to the extent and subject to the conditions indicated above. 13. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's Rules, 47 C.F.R. 0.321 (1996). FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau