Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) Delmarva Broadcast Service ) CSR-5354-N General Partnership ) ) For Waiver of 76.92(f) and 76.156(a)) of the Commission's Rules ) MEMORANDUM OPINION AND ORDER Adopted: June 28, 1999 Released: June 30, 1999 By the Deputy Chief, Cable Services Bureau: I. INTRODUCTION 1. Delmarva Broadcast Service General Partnership, licensee of Television Broadcast Station WMDT (ABC, Ch. 47), Salisbury, Maryland ("WMDT"), 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)) and the syndicated program exclusivity rules (47 C.F.R. 76.156(a)). Scripps Howard Broadcasting Company, licensee of Station WMAR-TV (ABC, Ch.2), Baltimore, Maryland ("WMAR-TV"), filed an opposition to the petition to which WMDT has replied. II. 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. Under the Commission's cable television syndicated programming exclusivity rules, a cable system may not import duplicating programming which has been purchased by a local station on an exclusive basis. The Commission's rules in general provide stations such protection within a station's 35-mile geographic zone. However, a local station may not exercise this right if an otherwise distant station is considered "significantly viewed" within the community served by the cable system. The significantly viewed exemption to the Commission's exclusivity rules is based on an otherwise distant station establishing that it receives a "significant" level of over-the-air viewership in a subject community. Should this viewership level be met, the station is no longer considered distant for purposes of the application of the Commission's exclusivity rules since it has established that it can be recieved over-the-air in the subject communities. 3. Station WMDT seeks a waiver of the significantly viewed exception to the Commission's network nonduplication and syndicated exclusivity rules so that it may enforce its rights to network nonduplication protection and syndicated program exclusivity against Station WMAR-TV, which is currently considered to be significantly viewed in Wicomico County, Maryland, and Sussex County, Delaware, where the cable communities served by Comcast Cable Communications are located. 4. In KCST-TV, Inc., the Commission held that in order to obtain a waiver of Section 76.92(f) of the Commission's rules, which provides for an exemption to the network nonduplication 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-specific 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, the viewing samples must be 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. III. THE PLEADINGS 5. In support of its petition, WMDT states that it is an ABC network affiliate, licensed to Salisbury, Maryland, and operates as part of the Salisbury ADI/DMA. WMDT points out that the cable systems involved herein are both located within the same market and all of the communities served are located within WMDT's 35-mile specified zone and Grade A contour. WMDT states that WMAR-TV, on the other hand, is licensed to Baltimore, Maryland, which is approximately 70-90 miles from the communities, and does not place either a Grade A or Grade B contour over the communities. Despite this, WMDT maintains that it is precluded from asserting its legitimate network nonduplication and syndicated exclusivity rights against WMAR-TV due to the fact that WMAR-TV is considered to be significantly viewed in the counties in which Comcast's cable communities are located. WMDT asserts that WMAR-TV no longer meets the significantly viewed standard in the cable communities herein and it commissioned VideoProbeIndex, Inc. ("VPI") to conduct combined surveys in the respective communities to determine WMAR-TV's actual significantly viewed status. WMDT states that VPI conducted surveys of two one-week periods for each of two consecutive years, which is fully consistent with the requirements set forth in Section 76.54(b) of the Commission's rules. The first year's surveys were conducted during the weeks of July 23-29 and October 20-November 4, 1997, and the second year's surveys during the weeks of July 22-28, and October 28-November 3, 1998. According to VPI, WMDT states that WMAR-TV's share of total viewing hours in noncable homes in the cable communities falls below the required 3% minimum, within one standard error, as shown in the table below: Survey Households Share Standard Net Standard Year Studied Viewing Error Weekly Error Hours Circulation 1997 199 1.0 0.5 9.9 2.8 1998 185 0.6 0.3 8.5 2.6 As a result, WMDT requests that the Commission grant its petition so that it can assert its network nonduplication and syndicated exclusivity rights in the subject communities. 6. In opposition, WMAR-TV argues that the surveys relied on by WMDT to demonstrate that WMAR-TV is no longer significantly viewed were not conducted in accordance with the Commission's procedural rules and are substantively flawed. As a result, WMAR-TV contends that they cannot be relied upon as a basis for removing WMAR-TV's significantly viewed status in the instant communities. WMAR-TV points out that Commission rules mandate that notice of a proposed audience survey be served on all licensees or permittees of television stations within whose predicted Grade B contour the cable communities are located, as well as all other system community units, franchisees, and franchise applicants in each of the cable communities at least 30 days prior to initial survey period. WMAR-TV states that WMDT has given no indication that it complied with this requirement. Failure to provide the required notice, argues WMAR-TV, prevents any interested parties from objecting to survey procedures and any petition for special relief based entirely upon such a resulting survey is necessarily flawed. 7. WMAR-TV states that in VPI's explanation of its methodology, it indicated that a diary provided to each survey participant "allows the keeper to list all viewing by the quarter hour" and that it calculated WMAR-TV's share of viewing hours and net weekly circulation based on information provided by survey respondents in "a 7-day viewing diary with 560 possible quarter-hour viewing entries." Further, WMAR-TV states, VPI defines "share" as a "station's percentage of total sample's weekly viewing hours" and "net weekly circulation" as "[t]he number of homes in which each station is viewed during the week. At least one quarter-hour must be entered with a minimum of five minutes of viewing time for the household to qualify." WMAR-TV maintains that the Commission's rules state that "[share of viewing hours] means the total hours that noncable television households viewed the subject station during the week, expressed as a percentage of the total hours these households viewed all stations during the period, and [net weekly circulation] means the number of noncable television households that viewed the station for 5 minutes or more during the entire week expressed as a percentage of the total noncable television households in the survey area." 8. WMAR-TV argues that it is evident that there are significant flaws in VPI's stated methodology. First, WMAR-TV states that the survey encouraged the collection of information in at least 15- minute increments rather than in the five minute increments contemplated under the Commission's rules. WMAR-TV contends that this may have been understood by the survey respondents not to seek information regarding briefer 5-minute viewing periods. Second, WMAR-TV states that there are 672 quarter-hour periods in seven days and VPI's survey relied only on "560 possible quarter-hour viewing entries" in a seven-day period. WMAR-TV asserts that VPI does not account for the remaining 112 quarter-hour periods (or 336 five-minute periods) which could substantially alter the study's resultant shares of viewing hours and net weekly circulation. Moreover, WMAR-TV states, VPI bases its conclusions on the "total sample's viewing hours" rather than on the Commission's mandate that the survey include an assessment of "total week hours" and monitor viewing "during the entire week." 9. Further, WMAR-TV points out that WMDT failed to provide the penetration rate of the cable system in any of the communities surveyed. WMAR-TV argues that the cable penetration rate has been recognized as a factor that may impact the determination of significantly viewed status and is a potential concern of the Commission in evaluating off-air viewing data submitted. WMAR-TV states that the cable penetration rate in the Salisbury market is 74 percent. It maintains that any survey absent cable penetration rate information is flawed because it may be based on information collected from noncable households in a community with a high cable penetration rate and could not then reliably establish the significantly viewed status of a television station in that community. Finally, WMAR-TV states that deletion of WMAR-TV from the cable system communities herein would discontinue service that residents have received since 1947 since it is likely that if WMDT's request is granted, Comcast will delete WMAR-TV from its line-up. WMAR-TV concludes that WMDT has failed to meet the high burden of proof necessary to demonstrate that WMAR-TV is no longer significantly viewed in Wicomico and Sussex Counties and its petition should be denied. 10. In reply, WMDT argues that none of the arguments raised by WMAR-TV have merit. First, WMDT states that it served the required pre-survey notice, in timely fashion, on February 5, 1997. Secondly, WMDT points out that the diaries used by VPI expressly instructed participants, in bold type, to record all viewing "for each quarter hour that your set is turned on five minutes or longer." WMDT states that VPI's diaries break down each day into quarter-hour increments because that is standard practice in the televison ratings industry. WMDT indicates that this is done today by Nielsen and was done by Arbitron at the time the Commission's original list of significantly viewed stations was compiled in 1972. Third, WMDT states that VPI's survey conforms to standard industry practice in that it, like Nielsen and Arbitron, ask survey participants to record their viewing on diary pages that list each quarter-hour beginning at 6 a.m. and ending at 2 a.m. (for a total of 560 quarter-hour listings per week). Fourth, WMDT argues that cable penetration rates well above 74 percent are no impediment to a survey of significantly viewed status. Finally, WMDT asserts that WMAR-TV's contention that a grant of the requested waiver would disrupt established viewing habits and harm the public interest is both generalized and unsubstantiated. In any event, WMDT points out that alleged "viewer disruption" is simply not an available defense to a proper demonstration that a station is no longer significantly viewed. IV. DISCUSSION 11. We do not agree with the arguments raised by WMAR-TV and find that VPI conducted its surveys according to approved and reasonable statistical methodology and that they fully comply with the requirements of Section 76.54(b) of the Commission's rules. Initially, we note that the collection information contained in VPI's diaries tracks industry standard methodology. While WMAR-TV argues that VPI's wording encourages the collection of information in 15-minute segments rather than the required five-minutes increments, we find that the actual language used in the diary instructions is sufficiently clear that survey participants would easily understand that a quarter-hour was to be marked when the station was viewed for at least five minutes within that quarter-hour. Further, with regard to quarter-hour viewing entries, standard audience survey practice is to consider each broadcast day from 6 a.m. to 2 a.m. (and sometimes 7 a.m. to 1 a.m.). This policy was adopted due to the fact that for many years this was the period between the sign-on and sign-off for a significant number of stations. Survey firms, such as Nielsen and Arbitron, continue to only measure this period as the full day due to extremely low viewing levels during the night. Moreover, the original Commission significantly viewed surveys conducted in 1972 also were defined in this way. Therefore, the use of a 20-hour day, with 560 quarter-hours per week is acceptable for this purpose. 12. With regard to WMDT's pre-survey notification, we find that WMAR-TV misapplies Section 76.54(c) of the rules. The service list set forth in Section 76.54(c) applies in those instances where a station is seeking to obtain significantly viewed status on a community-specific or system-specific basis pursuant to Section 76.54(b). Such a change in status would naturally affect all of the television stations, cable operators and franchising authorities that serve the affected communities and for that reason they are required to be served. In situations, such as here, where a station is seeking to prove that a competitor is no longer significantly viewed with respect to a specific cable system, only those parties directly affected need be notified since in all other respects the competing station's significantly viewed status would be unchanged. In addition, we disagree with WMAR-TV's conclusions that WMDT erred in not providing cable penetration data and that information collected from noncable households in a community with a high cable penetration rate would not reliably establish significantly viewed status. The only relevance of cable penetration data is whether or not a statistically valid sample of noncable homes can be derived and the 74 percent penetration level claimed by WMAR-TV in this instance is not sufficiently high to render the survey invalid. For example, only when cable penetration exceeds 90 percent have rating services failed to report separate cable and noncable data in their routinely published reports. In any event, since significantly viewed status is a measure of the viewing patterns of noncable homes, the required calculation of standard error and its use along with the sample results assures that the survey results are representative of actual viewing levels in noncable homes and are not unreasonably skewed by any small sample size. Moreover, there is nothing in the Commission's rules to require the petitioner to provide cable penetration data. 13. In KCST-TV, Inc., the Commission determined that Section 76.92(f) of the rules could be waived if it could be shown that a station has not met the standards for significantly viewed status for two consecutive years based on community- or system-specific data, to one standard error. WMDT submits the results of system-specific surveys conducted by VPI over four separate, consecutive four-week periods for the two year periods of July and October/November 1997 and July and October/November 1998. These survey dates meet the criteria set forth in the rules and KCST-TV, Inc. that the two one-week surveys be separated by at least 30 days and that both surveys may not occur between April and September. In addition, since combined community surveys were conducted, the rules require that each community be proportionately represented on the basis of its relative population in the sample. We find that the sample distribution herein is proportional to the population, as required. 14. For the above reasons, we find that a grant of the waiver of the signficantly viewed exception from the network nonduplication and syndicated exclusivity rules with regard to the system-specific survey for the communities of Salisbury, Delmar, Fruitland, Hebron and unincorporated areas of Wicomico County, Maryland, and Delmar and unincorporated areas of Sussex County, Delaware, will serve the public interest. V. ORDERING CLAUSES 15. Accordingly, IT IS ORDERED, that the petition filed by Delmarva Broadcast Service General Partnership IS GRANTED. 16. This action is taken pursuant to authority delegated under Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau