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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: ) ) Texas Cable Partners, L.P. ) CSR-5384-A d/b/a Paragon Cable ) ) For Modification of Market of Station ) KTAQ, Channel 47, Greenville, TX ) ) MEMORANDUM OPINION AND ORDER Adopted: July 16, 1999 Released: July 20, 1999 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. In the above-captioned proceeding, Texas Cable Partners, L.P. d/b/a Paragon Cable ("Paragon") has asked the Commission to exclude for must carry purposes the Texas cable communities of Coppel, Grapevine, Irving and Lewisville from the area of dominant influence ("ADI") of television broadcast station KTAQ (Ch. 47) Greenville, Texas. KTAQ filed an opposition to this petition, to which Paragon has replied. BACKGROUND 2. Pursuant to Section 614 of the Communications Act and implementing rules adopted by the Commission in Implementation of the Cable Television Consumer Protection and Competition Act of 1992, Broadcast Signal Carriage Issues ("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 for this purpose 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. Under the Act, however, the Commission is also directed to consider changes in market areas. Section 614(h)(1)(C) 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 purpose of this section. In considering such request, the 1992 Cable Act 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 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 Must-Carry Order 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 of other programming of interest to the community could be demonstrated by program logs or other descriptions of local programming 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. 6. As for deletions of communities from a station's market, the legislative history of this provision indicates that: The provisions of [this subsection] reflect a recognition that the Commission may conclude that a community within a station's ADI may be so far removed from the station that it cannot be deemed part of the station's market. It is not the Committee's intention that these provisions be used by cable systems to manipuate their carriage obligations to avoid compliance with the objectives of this section. Further, this section is not intended to permit a cable system to discriminate among several stations licensed to the same community. Unless a cable system can point to particularized evidence that its community is not part of one station's market, it should not be permitted to single out individual stations serving the same area and request that the cable system's community be deleted from the station's television market. 7. In adopting rules to implement this provision, the Commission indicated that requested changes should be considered on a community-by-community basis rather than on 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. The rules further provide, in accordance with the requirements of the 1992 Cable Act, that a station not be deleted from carriage during the pendency of an ADI change request. MARKET FACTS AND THE PARTIES' ARGUMENTS 8. Paragon requests that KTAQ's market be modified to exclude the communities of Coppell, Grapevine, Irving and Lewisville, Texas served by Paragon's "Dallas Metro System." Paragon contends that even though the Dallas-Ft. Worth, Texas ADI encompasses both the station and communities served by its cable television system, KTAQ does not serve the cable communities in question. Paragon states that the distance from Greenville, the station's city of license, to the cable communities ranges from 48 to 57 miles in the case of Grapevine, site of the Dallas Metro System's principal headend. Paragon notes further that KTAQ's Grade B contour falls approximately 15 to 20 miles short of each cable community. 9. Paragon argues that the statutory factors for market modification weigh in favor of deleting the cable communities from KTAQ's market. Paragon asserts that the station has no history of carriage on its system even though KTAQ has been on-the-air since 1994. Paragon also claims that KTAQ, as a home shopping station, does not provide local programming specifically targeted to the cable communities at issue. As for coverage by other qualified television stations, Paragon asserts that it carries 10 commercial stations licensed to Dallas and/or Fort Worth which provide a wide range of local news, sports, public affairs and public service coverage. Finally, Paragon asserts that KTAQ has no significant viewership in the cable communities. The cable operator states that according to Nielsen, the station has no reported off-air viewing in Dallas, Denton, or Tarrant Counties, where the cable communities are located. 10. In opposition, KTAQ generally argues that the petition should be denied because Paragon fails to provide particularized and persuasive evidence that the communities in question are not part of KTAQ's market, and thus does not overcome the presumption in favor of ADI carriage. With regard to the historical carriage factor, KTAQ asserts that it is carried on cable systems covering more than 50 communities in the Dallas-Ft. Worth ADI, including several communities contiguous to and in the general area served by Paragon's system, with an estimated 483,000 subscribers. KTAQ also argues that on February 12, l999, the Commission granted KTAQ a construction permit to increase its effective radiated power, and that its new predicted Grade B contour covers Lewisville, Coppell, and Irving, and that the fourth community, Grapevine, is on the fringe of the new Grade B contour. In addition, KTAQ argues that the communities in question are within 41-45 miles from the station's transmitter site to the closest border of each of the communities. KTAQ also contends that it produces and broadcasts a religious program, aired 9 hours per week, which includes commentaries on specific issues and events occurring within and in the general area of the communities in question. KTAQ argues that because it is providing local programming, Paragon's carriage of other stations providing local service is irrelevant. Discussing audience share, KTAQ asserts that the Nielsen Report cited by Paragon does not state that KTAQ has no audience in the communities at issue, but that the report states that the station does not meet the "minimum reporting standards" for reporting purposes. KTAQ, nevertheless, argues that audience share does not count as much as annual sales data when a home shopping station is involved in a market modification dispute; in this instance, KTAQ has generated between $750,000 and $1,250,000 in annual sales through its home shopping programming seen in the Dallas-Ft. Worth area. 11. In reply, Paragon reiterates that it has never carried KTAQ nor any other television station operating in the same general area as KTAQ. Paragon also asserts that KTAQ based its mileage calculations on the distance from its transmitter site to the respective communities, rather than its community of license. Paragon contends that the actual distances from the transmitter site are greater than those represented by KTAQ. Paragon argues that although the Commission has authorized an increase in effective radiated power for KTAQ since the cable operator's filing of its petition, the station does not now provide such coverage, and there is no indication when, or if, KTAQ will implement the authorized power increase. Paragon argues that KTAQ is "conspicuously silent on its plans for the power increase, which suggests that the activation date is not imminent," and argues that the Bureau should rely on KTAQ's signal strength as now provided to viewers rather than base a decision on speculative coverage areas. Paragon continues that KTAQ's new predicted coverage contour reveals that the proposed Grade B contour does not cover Lewisville and bisects Coppell, and that the contour clearly falls short of Irving and Grapevine, where Paragon's headend is located. Paragon also argues that the station fails to demonstrate how its programming can be considered local, and how programming from other area stations does not serve the local needs of subscribers in the cable communities. Paragon also discounts KTAQ's home shopping sales data, arguing that sales transactions have occurred throughout the entire Dallas area and that such sales figures hardly represent evidence of sustained viewership in the cable communities. Paragon further argues that KTAQ's sales map establishes that no sales for home shopping services have occurred in the cable communities in question. ANALYSIS AND DECISION 12. We grant Paragon' modification request. Based on geography and other relevant information, we believe that the cable communities herein are sufficiently removed from KTAQ that the communities ought not be deemed part of the station's market for mandatory carriage purposes. As an initial matter, we note that, according to the legislative history of the 1992 Cable Act, the use of ADI market areas is intended "to ensure that television stations be carried in the areas which they service and which form their economic market." Changes may be sought and granted by the Commission "to better effectuate the purposes" of the mandatory carriage requirements. The market change process incorporated into the Communications Act, however, is not intended to be a process whereby cable operators may seek relief from the mandatory signal carriage obligations apart from the question of whether a change in the market area involved is warranted. When viewed against this backdrop, and considering all of the relevant factual circumstances in the record, we believe that Paragon's deletion petition appears to be a legitimate request to redraw ADI boundaries to make them congruous with market realities. Paragon's actions do not reflect an intention to avoid its signal carriage responsibilities under the 1992 Cable Act and the Commission's rules, nor do they evidence a pattern of discriminatory conduct against the station. Historic Carriage 13. KTAQ began operation in 1994. Despite being on-the-air for nearly five years, it has no history of carriage on Paragon' system. Given the statutory directive, weight must be given to this factor, but that must be done bearing in mind that the objective of the Section 614(h) process is to "better effectuate the purposes" of the broadcast signal carriage scheme. Thus, with respect to the question of historical carriage patterns, attention must be paid to the circumstances from which such patterns developed. Some stations have not had the opportunity to build a record of historical carriage for specific reasons that do not necessarily reflect a judgment as to the geography of the market involved. Therefore, the historical carriage factor -- to the extent such lack of carriage is reflective of factors outside of the shape of the market -- is not by itself controlling in these circumstances because such an implementation of the 1992 Cable Act would, in effect, prevent weaker stations, that cable systems had previously declined to carry, from ever obtaining carriage rights. We recognize that other cable systems in the general vicinity of Paragon' systems carry KTAQ. However, it does not appear that there is a widespread carriage pattern of KTAQ in the general area served by Paragon. As such, the evidence relating to this statutory factor, as it pertains directly to Paragon' systems, does weigh in favor of excluding the cable communities from KTAQ's market, but is not outcome determinative by itself. Grade B Coverage/Local Service 14. A station's local service to cable communities is one of the relevant factors to consider in this particular case that is not influenced by the type or age of the station involved or historical carriage. Service may be measured through geographic means: by examining the distance between the station and the cable communities subject to the deletion request and taking into account natural phenomena such as waterways, mountains and valleys which tend to separate communities. A station's broadcast of local programming, which has a distinct nexus to the cable communities, is also evidence of local service. Finally, a station's Grade A or Grade B contour coverage is an additional indicator of local service and we will weigh the presence or absence of such technical coverage accordingly. In the instant proceeding, KTAQ does not satisfy any of the local coverage elements we find important in the market modification analysis. First, KTAQ, which broadcasts primarily in a home shopping format, does not air programming that could be considered "local" to the cable communities at issue. KTAQ provides no evidence that the commentaries provided by the station's owner during the program "Miracles Today" is directed to, or involves in any way, the communities in question as contrasted with other Texas communities within or outside the market. Second, although KTAQ has been authorized to increase its effective radiated power, we note that the station has provided no information regarding its intention to do so. Even if the station were to effect an increase, it is not clear from the information supplied by KTAQ that its Grade B contour would cover the cable communities in question. Carriage of Other Stations 15. We also believe that Paragon' carriage of other local television stations provides support for the action requested. Where a cable operator is seeking to delete a station's mandatory carriage rights in certain 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. In this case, we find the Dallas-Ft. Worth stations carried by Paragon have a closer nexus to the cable systems herein than does KTAQ. These market facts, coupled with the distance between the cable systems and KTAQ, supports Paragon's market modification request under the third factor. Viewership 16. Paragon also shows that KTAQ has no audience, despite being listed by Nielsen, in the cable communities at issue. This dearth of viewership is of evidentiary significance when tied with the lack of both historical carriage and Grade B coverage. While, in certain circumstances a home shopping station could conceivably indicate an audience by other means, such as local sales figures, we find that KTAQ's showing in this proceeding falls short because it did not adequately demonstrate that it has sold merchandise in or near the Paragon cable communities. Nonetheless, as KTAQ correctly notes that the Commission has recognized that specialty stations, such as itself, typically attract limited audiences and thus the ability to rely on this factor is somewhat reduced. Summary 17. We have carefully considered each statutory factor in the context of the circumstances presented here. Given the evidence as to the lack of Grade B coverage, the lack of viewership in the cable communities at issue, the lack of carriage of KTAQ on Paragon' cable systems, and the absence of evidence indicating that KTAQ provides local programming, we conclude that deletion of Paragon's cable communities from KTAQ's market for mandatory carriage purposes better effectuates the purposes of Section 614of the Communications Act. ORDERING CLAUSES 18. Accordingly, IT IS ORDERED, pursuant to Section 614(h) of the Communications Act of 1934, as amended (47 U.S.C.  534) and Section 76.59 of the Commission's Rules (47 C.F.R.  76.59), that the captioned petition for special relief filed February 24, l999 by Texas Cable Partners, d/b/a Paragon Cable IS GRANTED. 19. 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