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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: ) ) Benedek License Corporation ) CSR-4973-N ) For Waiver of 76.92(f) of the ) Commission's Rules ) MEMORANDUM OPINION AND ORDER Adopted: August 17, 1998 Released: August 19, 1998 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. Benedek License Corporation, licensee of Television Broadcast Station WBKO (ABC, Ch. 13), Bowling Green, Kentucky, has filed a petition for special relief seeking a waiver of the Commission's significantly viewed exception to the network nonduplication rules (47 C.F.R. 76.92(f). TCI TKR Limited Partnership d/b/a TKR Cable of Southern Kentucky ("TKR") filed an opposition to this petition to which WBKO has replied. BACKGROUND 2. Upon the request of a local station which has the exclusive rights to distribute a network program, a cable operator generally may not carry a duplicating network program broadcast by a distant station. However, an otherwise distant station is exempt from the application of the network nonduplication rules if it is considered significantly viewed in a relevant community. Station WBKO seeks a waiver of the significantly viewed exception to the Commission's network nonduplication rules so that it may assert network nonduplication protection against Station WKRN-TV (ABC, Ch. 2), Nashville, Tennessee, which is currently considered to be significantly viewed in Warren County, Kentucky, where several communities are served by the TKR cable system. 3. In KCST-TV, Inc., the Commission held that in order to obtain a waiver of 76.92(f) of the Commission's Rules, which provides for an exemption to the network nonduplication rules for significantly viewed stations, petitioners would be required to demonstrate for two consecutive years that a station was no longer significantly viewed, based either on community, or system specific, noncable viewing data, to one standard error. For each year, the data must be obtained as a result of independent professional surveys taken during two one-week periods which are separated by at least thirty days and are distributed proportionately among the relevant cable communities and not more than one of the surveys may be taken between April and September of each year. SUMMARY OF ARGUMENTS 4. In support of its petition, WBKO states that it has obtained network nonduplication exclusivity rights from the ABC network in its specified zone, but is prevented from requiring TKR's Bowling Green cable system to delete the duplicating network programming of distant station WKRN-TV because that station is considered to be significantly viewed in the cable system's county. WBKO points out that the Bowling Green DMA, to which it is licensed, is the 181st television market in the country and that the community of Bowling Green, with a population of 46,600, is the largest city in Warren County. WBKO states that TKR operates the only cable system in Warren County and all of the communities it serves lie within the station's specified zone and constitute the heart of the television market. WBKO argues that WKRN-TV no longer meets the applicable viewing levels for achieving significantly viewed status in Warren County and its submits special tabulations of A.C. Nielsen audience survey data of noncable homes for two consecutive years which establishes that fact. WBKO states that for convenience the data has been broken down into two separate surveys -- one for the city of Bowling Green alone, and one for the system as a whole. According to the Nielsen study, WBKO states that WKRN-TV's share of total viewing hours in noncable homes falls below 3%, within one standard error, as shown in the table below: Household Share Standard Net Standard Studied Viewing Error Weekly Error Hours Circulation Bowling Green 118 2% .7 25.07% 4.15 May/July/Nov.94 Feb. 95 TKR Cable System 150 2% .7 25.60% 3.7 May/July/Nov.94 Feb. 95 Bowling Green 100 1% .6 13.89% 3.59 May/July/Nov.95 Feb.96 TKR Cable System 132 1% .6 14.18% 3.6 (est.) May/July/Nov.95 Feb.96 As a result, WBKO requests that the Commission grant its petition so that it can assert its network nonduplication rights in its core local market. 5. In opposition, TKR argues that WBKO's petition fails to satisfy the extraordinarily high standard set by the Commission in such instances and its grant would be contrary to Commission rules and precedents and the public interest. TKR points out that a petitioner seeking to obtain a waiver of the significantly viewed exception to the network nonduplication rules has two alternatives: 1) it can show, through the use of community or system-specific data, that a particular station has not met the significantly viewed standard for two consecutive years; or 2) it can show that the duplicative programming of the more distant station is causing it severe economic distress that threatens its ability to serve the public. TKR states that WBKO has chosen the first of these alternatives and proffers 1994-95 and 1995-96 Nielsen data in support. However, TKR maintains that in evaluating the accuracy and reliability of the off-air viewing patterns in a community, the Commission must consider the level of cable penetration in that community. TKR points out that according to the most recent edition of the Television & Cable Factbook its system serves 20,222 subscribers out of 26,500 franchise area households in Warren County, or 77% of the total. TKR asserts that such a high level of cable penetration, which exceeds the national average, would render the reliability and representativeness of the off-air diaries suspect. Further, TKR argues that the high level of cable penetration distorts WBKO's ratings analysis in at least two critical ways: 1) viewers who previously viewed WKRN-TV over-the-air (and thus contributed to its significantly viewed status in 1972) and may now continue to view the station via cable, are excluded from a current significant viewing study of noncable households; and 2) the relatively small percentage of noncable households are, by definition, unrepresentative of the local television audience and the fact that they do not favor WKRN-TV does not mean that local television viewers generally feel likewise. In other words, TKR states, the high cable penetration seriously undercuts the reliability of noncable surveys in determining actual off-air availability and station popularity. TKR argues that even if WBKO's figures are accepted, the 1994-95 surveys indicate that WKRN-TV still meets the Commission significant viewing standard, even with the standard error taken into account. For instance, TKR states that the total viewing share noted for WKRN-TV in that survey was 2% + .7 standard error, or 2.7%, which when rounded up to the nearest whole number equals the Commission's standard of 3% for network stations. Moreover, in the same survey, TKR notes that WKRN-TV exceeds the 25% net weekly circulation share. As a result, TKR maintains that WBKO has failed to show that WKRN-TV falls below the significant viewing threshold for two consecutive years. 6. In addition, TKR argues that WBKO's request is contrary to the underlying purpose of the Commission's network nonduplication rules, which were intended to preserve both the competitive conditions of the broadcast marketplace and the exclusivity expectations of local stations regarding imported duplicative distant signals. TKR contends that these rules were not designed to provide local broadcasters with a friendlier marketplace by granting them protection from signals they would have had to compete with in a broadcast- based, rather than a cable-based, environment. Since WKRN-TV is indisputably a competitor to WBKO as it places a Grade B contour over the majority of Warren County, TKR contends that WBKO is seeking to minimize competition and secure a commercial windfall by deleting WKRN-TV from the local cable line-up. Moreover, TKR continues, as most of its subscribers do not have A/B switches, a forced blackout of WKRN- TV will leave them without an option available to noncable households. Finally, TKR argues that WBKO's request completely ignores WKRN-TV's long history of service to the Warren County area or the subscriber disruption which would be caused by its deletion. TKR emphasizes that WKRN-TV and WBKO offer different programming at numerous periods throughout the day and WBKO does not always carry the full complement of ABC programming. Finally, TKR states that WBKO ignores the fact that, since Bowling Green itself does not have a full complement of network signals, the market is closely tied to the Nashville market and viewers have traditionally looked to Nashville for such programming. Indeed, TKR points out that Bowling Green does not even have its own edition of TV Guide and viewers are likely to be frustrated if WBKO deviates from the ABC programming schedule they see listed. 7. In reply, WBKO states that it has adequately demonstrated that WKRN-TV achieved only a 2% and 1% share of viewing hours in the noncable homes of Warren County for two consecutive years and that these levels are below the applicable 3% significantly viewed benchmark for network stations. It argues that Nielsen's sample surveys more than satisfy the requirements set in KCST-TV, Inc., supra, and a waiver of the significantly viewed exception to the network nonduplication rules is warranted. Moreover, WBKO points out that despite the fact that WKRN-TV did not oppose the instant request, TKR suggests that somehow WBKO's exercise of its nonduplication rights might disrupt the cable system's long-term carriage of WKRN-TV and urges denial of the petition on one of three theories, all of which the Commission has previously rejected. First, WBKO states that TKR's presumption that otherwise statistically-reliable audience survey data must be found unsatisfactory once cable penetration reaches the level of 77% is unwarranted. WBKO states that the Commission has declined to adopt such an overly rigid standard and has previously accepted the validity of audience survey data where cable penetration exceeds 77%. While the Commission has ruled that cable penetration may, in appropriate circumstances, constitute one relevant factor, WBKO points out that TKR has not shown the existence of any such appropriate circumstances in this instance that would justify a concern for rejecting reliable Nielsen data. In any event, WBKO states that TKR overstates the level of cable penetration. While TKR reports the number of cable subscribers (20,222) as a percentage of current television households (26,500), WBKO indicates that, because the franchise area includes all of Warren County, cable penetration should be properly computed based on all of the households in the county (32,040). When that is done, WBKO states that cable penetration is only 67%, which is equal to the national average. Moreover, WBKO argues that TKR is in error in its assumption that significantly viewed surveys must constitute a representative sample of all television audience, both cable and noncable alike. Sections 76.54 and 76.5(i) of the Commission's Rules plainly call for a sampling of noncable homes only. 8. Second, WBKO states that the "rounding" scheme advocated by TKR totally ignores the fact that Nielsen found that WKRN-TV only achieved a 2% and 1% share of viewing hours in two consecutive years. And although TKR concedes that the Nielsen study satisfies KCST-TV, Inc. by being valid to more than one standard error, WBKO states that TKR seeks to alter Nielsen's 2% finding for the first year by adding the .7 standard error to that amount and then rounding the combined figure of 2.7% to the next highest number (e.g. 3%). WBKO points out that in Cypress Broadcasting Corporation, supra, the Commission rejected a similar rounding theory in which the petitioner, noting that the distant independent station involved had achieved a 1.1% share with a standard error of .7%, attempted to round up to 2% from a combined figure of 1.8%. WBKO argues that acceptance of TKR's theory would mandate that petitioners demonstrate that a station is not significantly viewed to more than two standard errors, but the Commission has found such a demonstration unnecessary. Moreover, WBKO states that in KCST-TV, Inc. and other cases, values are reported to a tenth of one percent, thus implicitly rejecting TKR's rounding argument. 9. Third, WBKO disagrees with TKR's argument that grant of the instant request will cause subscriber disruption or that it conflicts with Commission policy and practice. WBKO contends that if, as TKR implies, Nashville programming is of such interest to the Bowling Green and Warren County viewers, the cable system should have ample incentive to continue carrying the nonduplicating local and syndicated programming of WKRN-TV. Moreover, WBKO states that TKR's suggestion that its private interests might not be adequately advanced if it cannot carry WKRN-TV full-time flies in the face of the fact that for many years it appears that TKR's Warren County system has elected to carry WKRN-TV on a part-time basis while airing CNBC weekdays from early in the morning to approximately 10 p.m. In any event, WBKO maintains that TKR's contention that the public is better served by allowing cable systems to carry local and distant network stations in their entirety was already considered and rejected by the Commission when it adopted the current network nonduplication rules. WBKO concludes that for small-market stations such as itself, it is particularly important to have the ability to enforce its nonduplication rights so that they will not be overshadowed by stations from much larger markets. DISCUSSION 10. WBKO submits special tabulations of A.C. Nielsen audience sweep survey data gathered over four separate, consecutive four-week periods for the two year periods of May/July/November 1994 and February 1995 and May/July/November 1995 and February 1996. The special tabulations are for noncable homes only from the zip codes in the area served by TKR. The use of zip codes to identify noncable households in the cable community for inclusion in a retabulation of data routinely collected by an organization, such as Nielsen, is permissible. These data are sufficient to meet the requirements set forth in KCST-TV, Inc. that the survey data demonstrate viewing levels in two years and the requirement of 76.54(b) that, at a minimum, surveys must provide two weeks of audience measurement in each year. In this case, the surveys include 16 weeks of data for each year, which exceeds the minimum and is acceptable for this type of survey. 11. WBKO has provided two sets of survey results for each year surveyed -- one community-specific showing for the community of Bowling Green, and one system-specific showing for the communities of Bowling Green, Smith Grove, Plum Springs and Woodburn. Section 76.54(b) and KCST-TV, Inc. both allow that surveys may be community or system specific, thus the information provided for Bowling Green separately satisfies the community-specific standard and may be used to determine whether WKRN-TV continues to meet the viewing standards for significantly viewed status. However, 76.54(b) states that "[i]f a cable television system serves more than one community, a single survey may be taken, provided that the sample includes non- cable television homes from each community that are proportional to the population." As presented herein, the data WBKO provides for the system as a whole does not indicate whether each community served by TKR is represented or whether the communities are proportionally represented in the larger sample. Accordingly, the data for the system as a whole does not meet the requirements of the rules and cannot be accepted for such a showing. 12. With regard to the community-specific showing for Bowling Green, we note that to be considered significantly viewed, WKRN-TV as a network affiliate must achieve a viewing share at least one standard error above a 3% share of total weekly viewing hours and at least one standard error above a 25% net weekly circulation in noncable homes. To demonstrate the converse, the petitioner must show that the reported audience shares are at least one standard error below such requirements. For the noncable homes of Bowling Green, WKRN-TV attains a 2% share of total weekly viewing hours and a net weekly circulation of 25.97% in 1995. The standard errors for these audience statistics are .7 and 4.15, respectively. Thus, when the standard error is considered, the total share of weekly viewing hours, plus the standard error, would be 2.7%, a value below the required 3% share for significantly viewed status. Since the criteria for significantly viewed status requires that both audience figures exceed the requirements, this station would not be significantly viewed regardless of its net weekly circulation share. For 1996, WKRN-TV attains a 1% share of total weekly viewing hours, with a standard error of .6 and a 13.89% net weekly circulation share, with a standard error of 3.59. As both of these figures are below the requirements for significantly viewed status once the standard errors are added (e.g., 1.6% and 17.48%), WKRN-TV is not significantly viewed. Accordingly, we find that for Bowling Green, WBKO has demonstrated that WKRN-TV does not meet the criteria for significantly viewed status for the two survey years and has met the test set forth in KCST-TV, Inc. 13. We are not persuaded by the arguments raised by TKR in its opposition that WBKO's survey does not meet the Commission's requirements for a waiver of the significantly viewed exception to the network nonduplication rules. While true that a survey can be affected by high cable penetration, it should be noted that the 77% penetration level claimed by TKR in this instance is not sufficiently high to render the survey invalid. For example, only when cable penetration exceeds 90% have rating services failed to report separate cable and noncable data in their routinely published reports. With respect to rounding, we have previously rejected arguments, such as TKR's, that the 2.7% combined share reported for WKRN-TV for 1995 should be rounded up to 3%. To round the calculated standard error to 1.0, instead of the 0.7 determined on the basis of the survey results and sample size as advanced by TKR, would be to require the petitioner to consider more than one standard error about the audience share to demonstrate that the station no longer meets the criteria for significantly viewed status. 14. For the above reasons, we find that a grant of a waiver of the significantly viewed exemption from the network nonduplication with regard to the community-specific survey for Bowling Green, Kentucky, will serve the public interest. With respect to the system-specific showing, however, we deny the requested waiver due to the insufficient showing. ORDERING CLAUSES 15. Accordingly, IT IS ORDERED, that the petition filed by Benedek License Corporation IS GRANTED to the extent indicated. 16. This action is taken pursuant to authority delegated under 0.321 of the Commission's Rules. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau