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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 the Matter of: ) ) Time Warner Entertainment-Advance/Newhouse ) Partnership, d b a Time Warner Cable ) CSR 5323-A ) Petition for Modification of Television Market of ) Station WRAY-TV, Wilson, North Carolina ) MEMORANDUM OPINION AND ORDER Adopted: March 30, 1999 Released: April 1, 1999 By the Deputy Chief, Cable Services Bureau: I. INTRODUCTION 1. Time Warner Entertainment-Advance/Newhouse Partnership, d b a Time Warner Cable ("Time Warner") filed the captioned petition which seeks to exclude from the market of television station WRAY-TV, Channel 30, Wilson, North Carolina, the communities served by Time Warner's Fayetteville and Southern Pines, North Carolina cable systems. An opposition to the petition was filed by SAH Acquisition Corporation II ("SAH"), licensee of WRAY-TV. Time Warner filed a reply to the opposition. II. BACKGROUND 2. Pursuant to Section 614 of the Communications Act of 1934, as amended by the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act"), and implementing rules adopted by the Commission in Implementation of the Cable Television Consumer Protection and Competition Act of 1992, Report and Order ("Must Carry Order"), commercial television broadcast stations are entitled to assert mandatory carriage rights on cable systems located within the station's market. A station's market 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 non-cable households within the areas served by the cable system or systems in such community. 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. 4. The Commission provided guidance in its Must Carry Order to aid decision making in these matters, stating: 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. III. MARKET FACTS AND ARGUMENT 5. Station WRAY-TV is located in the Raleigh-Durham ADI as are the communities served by Time Warner's Fayetteville and Southern Pines cable systems. Time Warner requests the Commission to modify WRAY-TV's television market by excluding the communities served by the Fayetteville and Southern Pines cable systems from WRAY-TV's market. In support of this request, Time Warner asserts that WRAY-TV has never been carried on either of these two cable systems, is geographically distant from both cable systems, provides a Grade B signal over none of the Southern Pines system and over a very small portion of the Fayetteville system, doesn't broadcast programming of specific interest or impact to residents of the Fayetteville and Southern Pines areas, and achieves no measurable viewing audience in the counties where the cable systems are located. 6. Time Warner states that the distance from Wilson, WRAY-TV's community of license, to Southern Pines is 90 miles, and 70 miles to Fayetteville. Time Warner asserts that WRAY-TV's Grade B signal contour falls approximately 20 miles short of Fayetteville and Southern Pines. Time Warner contends that of the 14 communities served by the Fayetteville system, only Dunn and Erwin are covered by the station's Grade B signal contour, while none of the communities served by the Southern Pines system is covered. Time Warner states that WRAY- TV hasn't been carried because of WRAY-TV's distance from the communities its systems serve and the station's failure to provide programming of particular interest or appeal to its subscribers. Time Warner states that WRAY-TV is not likely to provide any meaningful local news or public affairs programming directed towards the areas served by these cable systems because it is operated as a home shopping station by SAH, a subsidiary of Shop at Home, Inc. Time Warner claims that WRAY-TV's absence from the television listings in the Fayetteville Observer-Times and the TV-Guide edition for Eastern North Carolina shows a lack of ties between the station and to the area served by these cable systems. Time Warner claims that local sporting events and issues of local concern are adequately covered the other stations from Fayetteville, Raleigh and other major North Carolina cities that are carried on the cable systems. Finally, Time Warner provided Nielsen Market Data indicating that WRAY-TV does not meet minimum reporting standards for inclusion as a reportable station for the Raleigh-Durham DMA, as evidence that WRAY-TV does not have significant viewership in the areas served by these cable systems. 7. SAH opposes the market modification request, arguing that Time Warner failed to establish that deletion of the communities at issue from WRAY-TV's market would better effectuate the purposes of the must carry rules as required by Section 614(h) of the Communications Act. SAH states that WRAY-TV initiated broadcasting in August of 1995 and experienced much difficulty in establishing and maintaining an economically viable broadcast service and fell into bankruptcy under a previous owner. SAH states that it acquired the station in the Fall of 1998, improved the station's facilities, and began operating WRAY-TV at full power for the first time. SAH claims that the improvements are beginning to transform WRAY-TV from a struggling new station to a robust, independent voice, adding diversity to the Raleigh-Durham ADI. After noting this background, SAH argues that deleting the communities at issue from WRAY-TV's market would jeopardize its efforts to bring WRAY-TV to economic health, in contravention of the must carry rules' purpose of assisting new and struggling stations and promoting diversity and competition. 8. SAH contends that the statutory must carry provisions explicitly define the area in which a station is entitled to assert must carry rights in terms of its ADI. Noting that the Supreme Court affirmed the constitutionality of the must carry rules in large part on the grounds that the must carry rules were designed to prevent significant reduction in the multiplicity of broadcast programming sources available, SAH contends that Congress appropriately gave broadcasters must carry eligibility on cable systems within their entire ADI. SAH argues that a grant of the relief requested by Time Warner would undermine WRAY-TV's ability to compete with other television stations within the Raleigh-Durham ADI for viewership and revenues. It contends that such a result would conflict with the goals Congress sought to achieve through enactment of the must carry provisions. SAH also cites recent Copyright Act revisions that defined stations within an ADI as "local" for copyright purposes as ensuring equitable treatment for similarly situated broadcast stations and ADI-wide carriage, in order that stations like WRAY-TV may compete effectively with other ADI stations carried on Time Warner's cable systems. 9. SAH disputes Time Warner's contention that WRAY-TV presents no programming directed to the communities at issue. SAH asserts that the station keeps community residents abreast of local news and events by means of a 30 minute public affairs program aired on Saturday mornings at 7:30 a.m. SAH states that WRAY-TV further satisfies the local community service factor by providing three hours per week of children's programming on which advertisements are limited for the protection of young viewers. SAH notes that Time Warner concedes WRAY-TV's Grade B signal coverage of Dunn and Erwin, North Carolina, two of the communities served by the Fayetteville cable system. It asserts further that SAH's Chief Engineer took tests which demonstrate that WRAY-TV's signal is available over-the-air in Fayetteville, Fort Bragg and Wade. SAH also notes that Time Warner's cable systems carry other television stations that are more distant from Fayetteville and Southern Pines than is WRAY-TV. SAH asserts that WRAY- TV, a UHF station, must serve all portions of the Raleigh-Durham ADI, and especially population centers like Fayetteville, in order to compete with other television stations in the ADI and to maintain economic viability. Finally, SAH argues Time Warner should receive no credit for carriage of other local stations under the community service factor in this market modification proceeding. IV. DISCUSSION AND ANALYSIS 10. Section 614(h)(1)(C) of the Communications Act requires the Commission to include or exclude particular communities from a television station's market for the purpose of ensuring that a television station is carried in the areas which it serves and which form its economic market. Time Warner contends that the communities served by its Fayetteville and Southern Pines cable systems are not part of WRAY-TV's economic market, are not served by WRAY-TV, and therefore should be excluded from WRAY-TV's television market. SAH, on the other hand, argues that WRAY-TV is entitled to ADI-wide carriage. SAH places particular emphasis on the difficulties WRAY-TV has experienced in becoming economically viable since it commenced operations. SAH argues that exclusion of the communities served by Time Warner would impact adversely on the efforts to make the station viable, in derogation of the purposes of the statutory must carry provisions. 11. We reject SAH's argument that WRAY-TV is entitled to carriage on Time Warner's Fayetteville and Southern Pines systems. Section 614(h)(1)(C)(i) specifically and unambiguously directs the Commission, in considering requests for market modification, to afford particular attention to the value of localism by taking such matters into account. 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 ... ." The value of the contribution of WRAY-TV's predominately "shop-at-home" format to program diversity is weighed along with other factors in our market modification determination and with SAH's efforts to improve WRAY- TV's facilities, including the recent commencement of operations at full licensed power. Moreover, we find SAH's interpretation of Section 614(h) and of the Commission's implementing regulations without sufficient basis in either the legislative history or the wording of the statute. We also reject SAH's suggestion that the redefinition of a "local" station for copyright purposes reaches beyond the matter of copyright fee obligations. SAH's arguments ignore Congress' directive allowing either broadcasters or cable operators to ask for market modifications so that a station's ADI better reflect the economic market. 12. WRAY-TV is a UHF commercial television station licensed to operate on Channel 30 at Wilson, North Carolina within the Raleigh-Durham ADI. Wilson is located approximately 70 miles from Fayetteville and 90 miles from Southern Pines, the two larger communities served by Time Warner's cable systems. These communities are also in the Raleigh-Durham ADI. Of the twenty two communities at issue in this proceeding, Station WRAY-TV provides a Grade B or better signal over only two of the communities nearest the station, namely Dunn and Erwin, North Carolina. Although not conclusive of themselves, these factors tend to indicate that the communities served by Time Warner may be too distant to be a part of WRAY-TV's market. 13. WRAY-TV has no history of cable carriage in any of the relevant communities, although the station has been operating since August of 1995. SAH identified only minimal viewing of WRAY-TV in three of the communities utilizing postal zip codes gleaned from customer-provided sales information. The fact that WRAY-TV is a relatively new station, which only recently began operating at full licensed power, bears on the weight to be given to this record of historic carriage and community viewership. The weight we give these factors must be tempered by, and considered with, other information tending to show any WRAY-TV connections to the communities at issue. 14. Another factor considered in market deletion cases is the availability of other broadcasters in the market. We reject SAH's argument that carriage of other local stations should not be considered in evaluating a cable operator's deletion request. Section 614(h)(1)(C)(ii)(I) 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 the station is providing only minimal 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. Carriage of other local stations may be used as evidence supporting 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, Time Warner carries network affiliated and independent stations licensed to communities in the Raleigh-Durham ADI. However, Time Warner provided only a general description of those stations' programming, which gives us no basis for giving Time Warner credit under the local community service factor. 15. SAH identified only one half-hour public affairs program aired at 7:30 a.m. on Saturday mornings and three hours per week of children's programming on WRAY-TV. SAH provided information indicating that the half-hour public affairs programs may be directed in some degree toward the local needs and interests of the communities at issue. However, with respect to the children's programs, SAH provided no program description establishing that those programs are of other than general interest to all children. We have consistently declined to find that a station must be considered "local," as Congress intended the term to mean in Section 614(h), by airing the minimal amount of programming associated with the communities in question that is shown on this record. 16. We have carefully considered each statutory factor in the context of the circumstances presented here. We conclude that the record demonstrates that the requested exclusion of the communities served by Time Warner's Fayetteville and Southern Pines cable systems from WRAY-TV's television market will better effectuate the must-carry statutory provisions' purpose of ensuring that television stations are carried in areas which they serve and which form their economic market. We conclude that WRAY-TV's economic market does not include, and that it does not serve, communities reached only marginally, or not at all, by its Grade B signal, a signal that includes only a minimal amount of programming directed toward the relevant communities in which station viewership is not established except in a few isolated instances. Additionally, WRAY-TV has never been carried on the cable systems serving the communities at issue. V. ORDERING CLAUSES 17. Accordingly, IT IS ORDERED, pursuant to Section 614(h) of the Communications Act of 1934 and Section 76.59 of the Commission's rules that the petition for special relief filed on behalf of Time Warner Entertainment-Advance/Newhouse Partnership, d b a Time Warner Cable in File No. CSR-5323-A IS GRANTED, and the television market of television station WRAY-TV IS MODIFIED to exclude Fayetteville, Fort Bragg, Dunn, Erwin, Hope Mills, Cumberland County, Spring Lake, Pope Air Force Base, Stedman, Parkton, Autryville, Godwin, Wade, Falcon, Aberdeen, Southern Pines, Pine Hurst, Pinebluff, Moore County, and Foxfire, North Carolina. 18. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau