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File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $// MO&O, WLDI, Inc., Assignment of License of Station WRAI(AM), San Juan, PR, FCC 95-409 //$ $/ 073.3555(c) Multiple Ownership /$ Before the FEDERAL COMMUNICATIONS COMMISSION FCC 95-409 Washington, D.C. 20554 In re Application of ) ) WLDI, Inc. ) (Assignor) ) ) and ) File No. BAL-950427EA ) Pedro Roman Collazo ) (Assignee) ) ) For Assignment of License of ) Station WRAI(AM), ) San Juan, Puerto Rico ) MEMORANDUM OPINION AND ORDER Adopted: September 27, 1995Released: September 28, 1995 By the Commission: 1. The Commission has before it the above-captioned application for assignment of license of Station WRAI(AM), San Juan, Puerto Rico, from WLDI, Inc. to Pedro Roman Collazo ("Collazo"), and a related request for waiver of the Commission's one-to-a-market multiple ownership rule. The application is unopposed. For the reasons stated below, we grant the waiver request and the assignment application. 2. Collazo is currently the sole shareholder of International Broadcasting Corporation ("IBC"), the licensee of independent UHF television station WSJU(TV) (Channel 18), San Juan, Puerto Rico, and Station WAHQ(FM), Carolina, Puerto Rico. The Grade A contour of Station WSJU(TV) encompasses the city of license of Station WAHQ(FM) and the Commission granted IBC a permanent waiver to own both stations in 1991, finding that IBC had met the Commission's failed station standard for a one-to-a-market waiver. Three Star Telecast, Inc., 4 FCC Rcd 4410 (1991). By the instant application, Collazo seeks to acquire another radio station in the San Juan market. The transaction complies with the Commission's radio ownership rules. However, the principal community contour of Station WRAI(AM) and the Grade A contour of Station WSJU(TV) encompass the entire area of San Juan, which serves as the community of license for both stations. Accordingly, Collazo seeks a waiver of the Commission's one-to-a-market rule. 3. Collazo bases his waiver request on the one-to-a-market standards adopted in Second Report and Order in MM Docket No. 87-7, 4 FCC Rcd 1741 (1989), recon. granted in part and denied in part, 4 FCC Rcd 6489 (1989) ("Second Report and Order Recon."). The Commission presumptively favors waiver requests involving (1) stations serving the top 25 television markets where there will be at least 30 separately owned, operated and controlled stations following the proposed combination ("top 25 market/30 voices" standard); or (2) "failed" stations (stations that have not been operating for a substantial period of time (4 months) or are involved in bankruptcy proceedings). If applicants do not meet either of these two standards, their applications must be evaluated under a more rigorous case-by-case standard. Under this standard, the Commission makes a public interest determination based on five criteria, although the applicant need not meet every criterion. The five criteria are: (1) the public service benefits that will arise from the joint operation of the facilities such as economies of scale, cost savings, and programming and service benefits; (2) the types of facilities involved; (3) the number of media outlets owned by the applicant in the relevant market; (4) the financial difficulties of the stations involved; and (5) the nature of the relevant market in light of the level of competition and diversity after joint operation is implemented. Second Report and Order, 4 FCC Rcd at 1753. 4. Collazo argues that he has met both the top 25 market/30 voices and the case-by-case standards. To meet the top 25 market/30 voices showing, a station must demonstrate that it is located in the top 25 ADI (area of dominant influence) television markets as defined by Arbitron Ratings Company and that following the transaction there will be at least 30 separately owned, operated, and controlled broadcast voices in the relevant broadcast market. 47 C.F.R.  73.3555(c), note 7; Second Report and Order, 4 FCC Rcd at 1751. Puerto Rico television markets are not included in Arbitron's ADI rankings. Nonetheless, Collazo argues that the San Juan market, which he defines as the San Juan-Caguas-Arecibo Consolidated Metropolitan Area ("CMSA") (Census FIPS Code 87), is densely populated and has characteristics similar to the top 25 ADI markets. In addition, he argues that, using either the CMSA or the smaller San Juan-Bayamon Primary Metropolitan Statistical Area ("PMSA") (Census Code 7440) to define the market, there are over 30 independent voices. We need not reach the issue of whether these alternative data are sufficient to give Collazo a presumptive waiver under the top 25 market/30 voices standard because, as discussed below, we find that Collazo has met the case-by-case standard for a one-to-a-market waiver. 5. Benefits of Joint Operation. Collazo contends that significant cost savings will be realized if the Commission allows the proposed combination. Collazo states that Station WRAI(AM) has been commonly owned with Station WLDI(FM) for many years and has been subsidized by that station. However, Collazo indicates that as a result of a death in the family which held the majority interest in the stations, Station WRAI(AM) is being separated from Station WLDI(FM). Collazo proposes to acquire Station WRAI(AM) and to collocate it with his TV station, WSJU. He asserts that such collocation will reduce the expense of maintaining a studio, including utilities, insurance, custodial services, and rent. Collazo states that once WLDI, Inc. assigns Station WRAI(AM), the WLDI(FM) studio will not be available for the continued operation of the AM station. Consequently, Collazo estimates that unless collocated with an existing station, as he proposes, any purchaser would have to occur studio rental charges of at least $1,000 per month or purchase a studio for no less than $100,000. By locating the WRAI(AM) studio at the existing WSJU(TV) studio site, Collazo contends that these additional charges will be eliminated. In addition, Collazo plans to retransmit a portion of Station WSJU(TV)'s programming on Station WRAI(AM) and, as a result, believes that he will be able to reduce staff significantly. Collazo states that Station WRAI(AM) had been staffed by three technicians and the former employees of Station WLDI(FM). Collazo plans to use the current staff and engineer of Station WSJU(TV) to operate Station WRAI(AM) and to hire two additional part-time operators for the AM station. He estimates a total employee cost savings of over $70,000 a year. Finally, by promoting the two stations to the current WSJU(TV) advertisers, as well as to new sponsors interested in a mix of TV/radio exposure, Collazo estimates that the advertising revenue of both stations will increase. Just considering the personnel reduction, the use of only one studio, and the increased revenue, he estimates an annual savings of over $100,000. Collazo states that the cost savings and revenue increase resulting from joint operation will allow him to invest more in programming for both stations. He does not anticipate assuming most of the brokered programming currently aired on Station WRAI(AM) and, instead, plans to increase local origination of programs suitable for both the AM and TV stations. In particular, he plans to air community call-in shows, news, and sports programming. Although Collazo indicates that he is already airing such programming on Station WSJU(TV), he states that he has been restricted in the amount he has been able to air because of the somewhat limited advertising reach of the station. Thus, he believes that the programming on both stations will improve as a result of the combination. 6. Type of Facilities. Collazo contends that the facilities involved are precisely the type that do not present a threat of undue media concentration or decreased diversity. Station WSJU(TV) is a UHF facility operating on Channel 18 with 447 kW effective radiated power ("ERP") and an antenna height of 32 meters above average terrain ("HAAT"). According to Collazo, it is an independent station which competes with four other television stations. Collazo contends that the station is not a "market powerhouse" and that it provides an alternative source of local programming. Station WAHQ(FM), Carolina, Puerto Rico, is a Class B station operating on Channel 299 (107.7 MHz) with 25.5 ERP and an antenna height of 499 meters HAAT. Collazo asserts that although the station is doing well, it is not one of the top rated stations in the San Juan market. He provides copies of audience ratings from Asesores, Inc. which show that Station WAHQ(FM) had a 1.1% average share of the listeners in the San Juan metro area from 6 a.m. to midnight, Monday through Friday, from August to October 1994, with a smaller average share on the weekend. The facility to be acquired, Station WRAI, is an AM station operating at 1520 kHz with a daytime and nighttime power of 10 kW, using a directional antenna. Collazo has provided audience ratings information prepared by Asesores, Inc., showing that the Station WRAI(AM)'s ratings are low in comparison with other stations in the market. Specifically, the data Collazo provides shows that Station WRAI(AM) had a .6% average share of the listeners in the San Juan metro area from 6 a.m. to midnight, Monday through Friday, from August to October 1994, with an equal or lower rating on the weekend. Thus, none of the three stations at issue have a dominant place in the Puerto Rico market. 7. Applicant's Other Media Outlets in the Market. As a result of the proposed combination, Collazo will have 100% ownership and control of one AM, one FM, and one television station in the same market. In addition, as we noted in footnote 3, supra, the Grade B contour of Station WVOZ-TV overlaps the Grade B contour of Station WSJU(TV). See Canal 48, Inc., 8 FCC Rcd 2193 (1993)(multiple ownership satellite waiver granted). 8. Financial Difficulties of Stations Involved. Collazo states that station WRAI(AM) is not in "apparent imminent threat of extinction." However, he claims that the station has continually sustained revenue losses and has had difficulty attracting advertisers. According to Collazo, Station WRAI(AM) had been greatly subsidized by the revenues from Station WLDI(FM). In support of his assertions, Collazo has submitted income and loss statements provided by the former general manager and part-owner of Station WRAI for the period from January 1994 to April 1995. These statements show losses during this period ranging from $532.56 to $19,906.65 a month, with the exception of one month where a profit of $662.14 was made. Collazo has submitted a declaration from a media broker and 6% owner of WLDI, Inc., stating that Collazo has been the only qualified buyer who is willing to pay a reasonable price for the station. Finally, Collazo indicates that although Station WSJU(TV) has been doing well, it too has experienced difficulty attracting advertisers. Station WSJU(TV) was acquired as a failed station in 1990 and Collazo contends that he is not earning enough to allow for capital improvement. 9. Competition and Diversity in the Market. The final factor relates to the nature of the relevant market in light of the Commission's concerns about diversity and competition. Relevant indicia include the number of broadcast outlets, the number of separately owned and operated "voices" in the market, and the presence of cable and non-broadcast media. To determine the number of broadcast voices in a market, the Commission normally looks at the relevant television metro market for radio stations and the relevant ADI market for television stations, as set forth in the Arbitron Ratings Television ADI Market Guide. Second Report and Order, 4 FCC Rcd at 1760, n. 101. However, as discussed supra, paragraph 4, Puerto Rico stations are not included in Arbitron's ADI ratings. Collazo asserts that the San Juan- Bayamon PMSA is equivalent to a radio market and that the San Juan-Caguas-Arecibo CMSA is equivalent to the television market or ADI. According to Collazo, there over 30 television stations and 100 radio stations licensed to Puerto Rico. Of those, Collazo indicates that six television and 20 radio stations are licensed to San Juan itself. In addition, Collazo asserts, there are 12 television and 40 radio stations licensed to communities within the relevant PMSA. In support of his calculations, Collazo attaches printouts from the FCC's data bases and pages of the relevant sections of the Broadcasting and Cable Yearbook. He also includes a detailed chart, compiled from the FCC's ownership files, which shows that approximately 33 of the stations licensed to communities within the PMSA will be independently owned and operated following the proposed transaction. These numbers, Collazo states, would be even higher if all the stations licensed to communities within the CMSA were considered. Finally, Collazo asserts that there are several cable television systems operating in Puerto Rico, including in San Juan itself, and that there are three local newspapers of wide circulation. Collazo contends that the "marketplace is abundant in voices" and that no harm to diversity will arise by allowing Station WRAI(AM), WSJU(TV) and WAHQ(FM) to be commonly owned. Further, according to Collazo, the marketplace requires combination of such stations because of the aggressive competition and unique topography which precludes adequate reception of signals and limits advertising revenue. 10. Discussion. In evaluating a request for waiver of the one-to-a-market rule, the Commission's goal "is to permit the public to benefit from such efficiencies of operation as may be achieved through the use of common facilities and staff, consistent with the maintenance of diversity and vigorous competition within the market areas involved." Second Report and Order Recon., 4 FCC Rcd at 6491. We conclude that Collazo's showing in support of a waiver of the one-to-a-market rule meets the Commission's case-by-case criteria, and that a waiver in this instance is consistent with the public interest and would not have an appreciable adverse effect on diversity and competition in the San Juan market. 11. Collazo has shown that common ownership and joint operation of Stations WSJU(TV) and WRAI(AM) will create operating efficiencies resulting in significant cost savings and presents the prospect of increased advertising revenues. This is particularly significant, Collazo asserts, since Station WRAI(AM) has been operating at a loss and Station WSJU(TV), which was acquired as a failed station in 1990, is not earning enough revenue to allow for capital investment. We are persuaded that Station WRAI(AM) would not likely be able to operate viably as a stand alone station. Further, we recognize that the savings realized and increased revenue earned as a result of joint operation could well result in enhanced public affairs programming for both Station WSJU(TV) and Station WRAI(AM). 12. Based upon the record before us, we conclude that the proposed combination will not create any undue concentration of ownership or control of broadcast media in the San Juan market. Collazo has demonstrated that following the acquisition of Station WRAI(AM), the market will be served by approximately 33 separate broadcast voices, in addition to four cable systems and three local newspapers. Further, as Collazo asserts, the types of facilities involved do not present issues of market dominance. There is substantial competition in the San Juan market and none of the three stations at issue have a dominant place in the market. Thus, we are persuaded that the common ownership of Stations WRAI(AM), WSJU(TV), and WAHQ(FM) and the joint operation of Stations WRAI(AM) and WSJU(TV), will not adversely affect diversity and competition in the San Juan market. 13. Accordingly, IT IS ORDERED, that the request for waiver of the Commission's one- to-a-market rule, 47 C.F.R.  73.3555(c), IS HEREBY GRANTED; and having found the applicants fully qualified, the application for assignment of license (BAL-950427EA) of Station WRAI(AM), San Juan, Puerto Rico, from WLDI, Inc. to Pedro Roman Collazo, IS HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary