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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 Request of ) ) Gray Communications Systems, Inc.) ) For Conditional Waiver of the Duopoly Rule) MEMORANDUM OPINION AND ORDER Adopted: July 18, 1997 Released: July 21, 1997 By the Chief, Mass Media Bureau 1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to delegated authority, has before it for consideration the above-captioned unopposed request by Gray Communications Systems, Inc. (Gray) for extension of divestiture period and for conditional waiver of the Commission's television duopoly rule. Gray's request relates to John H. Phipps, Inc., 11 FCC Rcd 13053 (1996), in which the Commission, inter alia, approved the assignment of license of station WCTV(TV) (CBS, Channel 6), Thomasville, Georgia from John H. Phipps, Inc. (Phipps) to WCTV Licensee Corp., a subsidiary of Gray. Because the Grade B contour of Phipps' WCTV(TV) overlaps the Grade B contour of Gray's WJHG-TV (NBC, Channel 7), Panama City, Florida, Gray requested, and the Commission granted, a temporary six-month waiver of the duopoly rule during which time Gray was to divest WJHG-TV. 2. At the time of its decision in John H. Phipps, Inc., the Commission had already undertaken a reexamination of its broadcast television ownership policies, including the duopoly rule. See Review of the Commission's Regulations Governing Television Broadcasting, Further Notice of Proposed Rule Making, 10 FCC Rcd 3524 (1995)(Television Ownership Further Notice). Subsequent to the release of that Television Ownership Further Notice, Congress directed the Commission to conduct a rulemaking proceeding to determine whether to retain, modify or eliminate existing limitations on the number of television stations that an entity may control within the same television market. See Section 202(c) of the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (Feb. 8, 1996) (Telecomm Act). In response to this Congressional directive in the Telecomm Act, and within the six-month waiver period granted in the Phipps case, the Commission released the Review of the Commission's Regulations Governing Television Broadcasting, Second Further Notice of Proposed Rule Making, FCC 96- 438 (released November 7, 1996) (Television Ownership Second Further Notice). In that Second Further Notice, the Commission tentatively concluded to authorize common ownership of television stations that are in separate Designated Market Areas (DMAs) and whose Grade A contours do not overlap. Television Ownership Second Further Notice at 57. 3. Specifically, in the Television Ownership Second Further Notice the Commission stated that it would be inclined during the pendency of the television ownership proceeding to grant duopoly waivers involving stations in different DMAs with no overlapping Grade A contours, conditioned on coming into compliance with the outcome of the proceeding within six months of its conclusion. It also noted there its tentative conclusion that the record in that proceeding "supports relaxation of the geographic scope of the duopoly rule from its current Grade B overlap standard to a standard based on DMAs supplemented with a Grade A overlap criterion." Id. at 57. The Commission further stated that "we do not believe granting waivers satisfying the proposed standard, and conditioning them on the outcome of this proceeding, will adversely affect our competition and diversity goals in the interim." Id. Additionally, the Commission gave the staff delegated authority to act on applications seeking waivers consistent with this interim policy. Because the interim policy was adopted by the Commission within the six-month period given Gray to divest WJGH-TV, Gray now requests an extension of its divestiture period to permit a conditional duopoly waiver, allowing common ownership of WCTV(TV) and WJHG-TV subject to the outcome of the Commission's local television ownership rulemaking proceeding. 4. In John H. Phipps, Inc., the Commission determined that Gray's request for temporary waiver of the duopoly rule to permit common ownership of WCTV(TV) and WJHG-TV was in the public interest. It based that determination on the proposal's consistency with the factors set out in previous duopoly waiver cases. See, e.g., Iowa State University, 9 FCC Rcd at 487-88. Specifically, the Commission took into account the fact that 11 Grade B signals reached viewers within all or part of the overlap area, and that 98% of the population received four additional television stations. The Commission also noted that the stations served separate and distinct markets; and that WJHG-TV, which is located within the Panama City DMA, is more than 100 miles apart from WCTV(TV), which is located within the Tallahassee DMA. While the Commission recognized that the 43.1% and 20.4% land area overlap within the Grade B contours of WJHG-TV and WHCT(TV), respectively, and the 24.4% and 10.9% population overlap within the Grade B contours of WJHG-TV and WCTV(TV), respectively, were substantial, it pointed out that, among other things, grant of the requested waiver would ultimately result in the break-up of a long-standing duopoly between another Gray station, WALB-TV, Albany, Georgia, and WJHG-TV. Accordingly, Gray was afforded six months within which to divest station WJHG-TV and to come into compliance with our rules. 5. Regarding its extension request, Gray submits an engineering exhibit which shows that the predicted Grade A contours of stations WJHG-TV and WCTV(TV) do not overlap and that the stations are located in separate DMAs. Gray points to NWCG Holdings Corp., DA 96-1852, released November 7, 1996 (14.7% and 16.5% area overlap and 29.4% and 10.2% population overlap), and KNSD License, Inc., DA 96-1848, released November 7, 1996 (20.5% and 5.6% area overlap and 14.9% and 2.6% population overlap) as cases in which the Commission granted conditional duopoly waivers subject to the outcome of the local ownership rulemaking proceeding for combinations involving stations whose Grade A contours do not overlap and which are located in different DMAs. In further support of its request, Gray pledges to continue to operate both stations separately and to maintain separate staffs. Additionally, Gray points out that the only factor that distinguishes the WJHG-TV/WCTV(TV) duopoly from those in NWCG Holdings Corp. and KNSD License, Inc. is the fact that the Commission granted Gray's application a few weeks before, rather than after, its release of the Second Further Notice. By granting Gray an extension pending the outcome of the rulemaking, Gray asserts, the Commission will avoid the "anomalous and unreasonable result" of requiring it to divest, while allowing similarly situated parties continued common ownership of two stations pending the outcome of the local ownership proceeding. 6. Based on the Commission's interim ownership policy outlined in the Second Further Notice, we believe that grant of a conditional waiver of the duopoly rule, subject to the outcome of the pending ownership rulemaking, is justified. We note that, in granting Gray's original waiver request, we relied, in part, on the fact that the proposed ultimate disposition of WJHG-TV would resolve a related duopoly violation attributable to Gray's common ownership of WJHG- TV and WALB-TV. Our action here will delay, and perhaps avoid altogether, Gray's sale of WJHG-TV. Gray has, however, filed an application to transfer control of WALB-TV to Ward L. Quaal, an independent trustee. See File No. BTCCT-970327IA. Because stations WJHG-TV and WCTV(TV) are in separate DMAs and the stations' Grade A contours do not overlap, the continued common ownership of WJHG-TV and WCTV(TV) is consistent with the interim policy set forth in the Second Further Notice. See also WHOA-TV, Inc., FCC 96-458 at  12- 13; 27 (released December 10, 1996). Moreover, our examination of the record, including Gray's showings in support of its original waiver request, and our conclusion based on that showing that temporary waiver was warranted, reveals nothing suggesting that we should not follow the established interim policy in this case. Consequently, we conclude that grant of temporary waiver, conditioned upon the resolution of the pending broadcast television ownership rule making, will serve the public interest, convenience and necessity. 7. Accordingly, IT IS ORDERED, That the request for a conditional waiver of the television duopoly rule, Section 73.3555(b) of the Commission's rules, to permit the common ownership by Gray Communications Systems, Inc. of television stations WJHG-TV, Panama City, Florida and WCTV(TV), Thomasville Georgia IS GRANTED, subject to the outcome of the Commission's pending broadcast television ownership rule making, (MM Docket Nos. 91-221 and 87-8). Should divestiture be required as a result of that proceeding, the licensee is directed to file, within six months from the release of the final order in MM Docket No. 91-221 and 87-8, an application for Commission consent to dispose of such stations as would be necessary for Gray Communications Systems, Inc. to come into compliance with the rules as provided in the final order. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau