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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 Petition of ) ) G Force, L.L.C. ) CSR 5232-A ) For Modification of Television Markets of ) Stations KWHE-TV and KIKU-TV, Honolulu, Hawaii ) MEMORANDUM OPINION AND ORDER Adopted: May 29, 1998 Released: June 3, 1998 By the Deputy Chief, Cable Services Bureau: 1. G Force, L.L.C., d/b/a Garden Isle Cablevision and Kauai Cablevision (together, "G Force") filed the captioned petition which seeks to exclude from the market of television stations KWHE- TV and KIKU-TV, Honolulu, Hawaii, all of the communities on the Island of Kauai, Hawaii. Separate oppositions to the petition have been filed by Lesea Broadcasting Corporation ("Lesea"), licensee of KWHE-TV, Honolulu, and by KHLS ("KIKU"), Inc., licensee of KIKU-TV, also Honolulu. G Force filed a consolidated reply to both oppositions. 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. Station markets in Hawaii are defined using Nielsen's 1991-1992 DMA Market and Demographic Rank Report, as are all areas outside the contiguous 48 states. Therefore, for the purpose of this proceeding, stations' market are their "Designated Market Area," or DMA as defined by the Nielsen audience research organization. 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 non-cable 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 non-cable 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 non-cable homes, and significantly viewed surveys typically measure viewing only in non-cable 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. 6. Adding communities to a station's market 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 the system's 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, and 3) 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 only one such duplicating signal, the operator is obliged to carry the station from the market whose city of license is closest to the principal headend of the cable system. Accordingly, depending upon the circumstances involved, the addition of communities to a station's market may have the following consequences. It may guarantee that station's carriage in the subject communities. Should there be more must-carry stations than one-third of the system's channel capacity, it would provide the system operator with an expanded list of must-carry signals from which to choose. Should the station be a duplicating network station, it will determine which station has priority carriage in the subject communities added. MARKET FACTS, ARGUMENT AND DISCUSSION 7. Stations KWHE and KIKU are located in the Honolulu, Hawaii, DMA. Although the communities served by G Force are on the Island of Kauai, those communities are within the Honolulu DMA. G Force requests the Commission to modify the television markets of KWHE and KIKU by excluding the communities it serves on the Island of Kauai from the two stations' markets. G Force supports the request by arguing that the two stations do not provide any service to the subject communities. G Force contends that an analysis of the stations' circumstances under the four statutory factors considered in market modification cases demonstrates that the communities it serves on Kauai should be excluded from the stations' markets. Lesea and KIKU oppose this request. The two station licensees point out that G Force presently carries five other commercial television stations and one non- commercial station from Honolulu. In view of this carriage of other Honolulu stations, Lesea and KIKU oppose the petition principally on the grounds that the requested market modifications would result in unjustified discrimination against their two stations. 8. The facts relevant to some of the statutory factors considered in market modification cases are undisputed. Neither station provides a Grade B or better signal over the communities on Kauai, neither station identified any viewership in those communities, and neither station has a history of carriage on cable in the communities. These circumstances stem largely if not entirely from the distance, approximately 118 miles, between Honolulu where the stations are located and Kauai. Weighed separately from any of the other factors we must consider, these factors in and of themselves may suggest that the communities on Kauai are too remote to be considered part of the two stations' markets. 9. However, this record contains other factors we must consider. Despite the fact that the signals of KWHE and KIKU fall well short of Kauai, both stations claim credit for programming specifically for the communities on that island. Lesea identified two and a half hours of programming each week which it contends is specifically directed toward Kauai audiences. The balance of KWHE's programming is made up of WB Network programming, nationally syndicated programming, and other programming of general interest. KIKU, on the other hand, seeks credit under the local programming factor based on the station's presentation of programming almost exclusively in various Asian languages. KIKU contends this Asian language programming meets the needs of the significant populations of Asian origin on Kauai. G Force disputes the weight that should be given to any of this programming as satisfying the needs of viewers on Kauai, because none of the programming reaches Kauai. The stations reply that the value of their programming to Kauai viewers, and the admitted absence of viewers in the subject communities, should not be discounted as long as the stations and their programming are not presented to Kauai viewers on G Force's cable systems. 10. The Commission has determined that consideration should be given to geographic factors that form a natural separation between television stations and communities served by cable systems. In this connection, we recognise that the market core of the television stations serving the Hawaiian Islands, and the stations themselves, are separated from the other Hawaiian Islands by expanses of ocean such as the Kauai Channel in the case of the Island of Kauai.. In this rather unique setting television service is provided by television stations located exclusively on the Island of Oahu, where Honolulu, the principal population center, is located. Service to the other islands is provided by means of satellite and translator stations operated on the other islands by the Honolulu stations. We note that five of the six Honolulu stations carried on G Force's cable systems operate translator stations on Kauai. Neither KWHE nor KIKU operates a translator or satellite station on Kauai. 11. The principal issue to be resolved in this case concerns the weight to be given to the fact that G Force currently carries stations KFVE-TV (UPN), KGMB-TV (CBS), KHNL-TV (NBC), KHON- TV (FOX), KITV-TV (ABC), and KHET-TV (non-commercial) from Honolulu on its two cable systems serving the communities on Kauai. Under Section 614(h) we must consider not only whether the cable system carries the station subject to the modification petition, but also whether "other stations located in the same area historically have been carried on the cable system . . . ." The ability of these Honolulu stations to reach cable viewers on Kauai where KWHE and KIKU are not carried impacts on the ability of KWHE and KIKU to compete with the other Honolulu stations. Such disparate carriage impacts heavily on the ability of KWHE and KIKU to reach viewers on Kauai that the other Honolulu stations are able to reach. We believe the carriage of the other Honolulu stations is indicative of the interest on Kauai in programming of Honolulu stations and is evidence of a market nexus between Honolulu and the cable communities on Kauai For these reasons, the carriage of the Honolulu stations in communities beyond the Grade B coverage of KWHE and KIKU adds substantial weight, along with the weight given other identified statutory factors discussed above, to our determination about whether to exclude the Kauai communities from KWHE's and KIKU's markets. G Force has not demonstrated why KWHE and KIKU should be treated differently from the other Honolulu stations. SUMMARY 12. We have carefully considered each statutory factor in the context of the circumstances presented here. The carriage of the five Honolulu stations on the G Force cable systems on Kauai is evidence of a strong market nexus between Honolulu and the cable communities on Kauai. Such carriage also impacts heavily on the ability of KWHE and KIKU to reach viewers in a portion of the Honolulu DMA that at least six of the other stations serving the DMA are able to reach. For these reasons, we believe G Force's carriage of the Honolulu stations is an overriding factor in this case. We conclude that G Force failed to demonstrate that the requested exclusion of the communities on Kauai served by its cable systems from KWHE's and KIKU's television markets will better effectuate the purposes of the must-carry statutory provisions. ORDERING CLAUSES 13.. For the foregoing reasons, IT IS ORDERED, pursuant to Section 614(h) of the Communications Act of 1934, as amended, 47 U.S.C. §534(h), and Section 76.59 of the Commission's Rules, 47 C.F.R. §76.59, that the petition for special relief filed on behalf of G Force, L.L.C. in File No. CSR-5232-A IS DENIED. 14. 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