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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of ) DA 96-1193 ) KELSO PARTNERS IV, L.P., ) (Transferor) ) ) and ) ) RAYCOM MEDIA, INC ) (Transferee) ) ) For Consent to the Transfer of ) Control of Ellis Communications, Inc., ) Controlling Corporation of Licensees or) Permittees of: ) ) KAME-TV, Reno, NV ) BTCCT-960524IV WUPW(TV), Toledo, OH ) BTCCT-960524XD WZVN-TV, Naples, FL ) BTCCT-960524XE WTNZ(TV), Knoxville, TN ) BTCCT-960524XF WACH(TV), Columbia, SC) BTCCT-960524XG WMC-TV, Memphis, TN ) BTCCT-960524XJ KABY-TV, Aberdeen, SD ) BTCCT-960524XN KOLD-TV, Tucson, AZ ) BTCCT-960524XP KPRY-TV, Pierre, SD ) BTCCT-960524XQ KSFY-TV, Sioux Falls, SD ) BTCCT-960524XR WECT(TV),Wilmington, NC ) BTCCT-960524XS WJTV(TV), Jackson, MS ) BTCCT-960524XT WHLT(TV), Hattiesburg, MS ) BTCCT-960524XU WSAV-TV, Savannah, GA ) BTCCT-960524XV KSLA-TV, Shreveport, LA ) BTCCT-960524XW WMC-AM, Memphis, TN ) BTC-960524XH WMC-FM, Memphis, TN ) BTCH-960524XI K67ET, Silver Spring, MD ) BTCTT-960524IW K44BE, Fallon, NV ) BTCTT-960524IX K34BL, Lovelock, NV ) BTCTT-960524IY K35AX, Hawthorne, NV ) BTCTT-960524IZ K57CV, Carson City, NV) BTCTT-960524XA K23DT, Tahoe City, NV ) BTCTT-960524XB W60CH, Tunica, MS ) BTCTTL-960524XK W27BR, Jackson, TN ) BTCTTL-960524XL W33BQ, Jackson, TN ) BTCTTL-960524XM K07QL, Mitchell, SD ) BTCTTV-960524XX K07VD, Benson, AZ ) BTCTTV-960524XY K07DA, Casa Adobes, AZ) BTCTTV-960524XZ MEMORANDUM OPINION AND ORDER Adopted: July 26, 1996 Released: July 26, 1996 By the Chief, Mass Media Bureau: 1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to delegated authority, has before it the above-captioned applications seeking consent to the transfer of control of Ellis Communications, Inc. ("Elcom"), which controls the corporate licensees or permittees of the above-referenced stations, from Kelso Partners IV, L.P. ("Kelso Partners") to Raycom Media, Inc. ("Raycom"). 2. Elcom controls the corporate licensees or permittees of 12 full-service television stations, three "satellite" television stations, 12 television translator stations, one FM radio station and one AM radio station. Raycom, which has no other broadcast interests, requests a permanent waiver of 47 C.F.R. 73.3555(c), the Commission's one-to-a-market rule, which generally proscribes the common ownership of television and radio stations in the same market, so that it may continue the common ownership and operation of WMC-AM, WMC-FM and WMC-TV (NBC, Channel 5), Memphis, Tennessee. A permanent waiver of the one-to-a-market rule was granted when Elcom of Memphis, Inc., the current licensee, acquired these stations from Scripps- Howard Broadcasting Co. in 1993. Additionally, pursuant to Note 5 to Section 73.3555 of the Commission's rules, which exempts from application of the multiple ownership rules those television stations that are "satellite" operations, Raycom requests continued satellite exemption status for WHLT(TV), Hattiesburg Mississippi, which operates as a satellite of WJTV(TV) (CBS, Channel 12), Jackson, Mississippi; and KABY-TV, Aberdeen, South Dakota, and KPRY-TV, Pierre, South Dakota, which operate as satellites of KSFY-TV (ABC, Channel 13), Sioux Falls, South Dakota. Continued satellite status has previously been granted to WHLT(TV), KABY-TV and KPRY-TV in the context of an application for assignment of these stations to wholly-owned subsidiaries of Elcom. For the reasons discussed below, we will grant the waiver request, the continued television satellite authorizations, and the transfer of control applications, which are unopposed. REQUEST FOR WAIVER OF THE ONE-TO-A-MARKET RULE 3. Raycom bases its waiver request on the one-to-a-market standards set forth in the Second Report and Order in MM Docket 87-7, 4 FCC Rcd 1741 (1988) (Second Report and Order), recon. denied in part and granted in part, 4 FCC Rcd 6489 (1989) (Second Report and Order Recon.). In accordance with these standards, the Commission presumptively favors requests involving: (1) stations serving the top 25 markets where at least 30 separately owned, operated and controlled stations will remain following the proposed combination; or (2) "failed" stations, i.e., stations which have not been operational for a substantial period of time or are involved in bankruptcy proceedings. Otherwise, waiver requests must be evaluated under the more rigorous case-by-case standard. 47 C.F.R.  73.3555(c), n.7. Because Memphis is ranked as the 42nd television market in the country, Raycom submits its waiver request pursuant to the case-by-case standard. 4. Under the case-by-case standard, the Commission makes a public interest determination by weighing five factors: (1) the potential public benefits of 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 the joint operation is implemented. See Second Report and Order, 4 FCC Rcd at 1753. 5. Benefits of Joint Operation. Raycom contends that continued joint operation of WMC-AM, WMC-FM and WMC-TV (collectively, "the WMC stations") will continue to produce substantial economic efficiencies, including cost savings of $220,000 per year based on studio operation, engineering, business and management costs. Raycom also claims that operating WMC-TV independently of WMC(AM/FM) would involve a one-time cost of $200,000 to relocate and separate the transmitter sites and studio operations. These efficiencies, Raycom asserts, were a major factor in the Commission's decision to grant a waiver of the one-to-a- market rule in Scripps-Howard. Raycom further contends that, since its acquisition of the WMC stations from Scripps-Howard, Elcom-Memphis has realized savings of approximately $200,000 per year in news-gathering costs. Raycom also maintains that the joint operation of the WMC stations would continue to produce significant public service benefits, and that without the stability and operating efficiencies that joint ownership provides, the WMC stations "could not continue to produce the abundance of locally-originated programming that they currently broadcast," such as: (1) Memphis in the Morning, a news and information program aired weekdays on WMC-AM; (2) call-in talk shows like the Mike Fleming Show, the Gil Gross Show and the Reanetta Hunt Show, which focus on topical issues on the day and are aired weekdays on WMC-AM; (3) Memphis News Magazine, a news magazine aired Sundays on WMC-FM; (4) local news, traffic and weather reports that run throughout the day on WMC-FM; and (5) various news segments, including Hometown Hero, Unsolved Murders, Food for Thought, Family Healthcast, Pet of the Week, produced by WMC-TV and aired during local newscasts. 6. Other Media Outlets/Types of Facilities. Raycom states that it has no other media interests in the Memphis market. Our engineering records show that WMC-TV is a VHF station operating with 100 kW effective radiated visual power ("ERP") from an antenna height at 308 meters above average terrain ("HAAT"), WMC-AM is a full-time Class B AM station operating on 790 kHz at 5 kW day and night (with a directional pattern at night), and WMC-FM is a Class C FM station operating on 99.7 MHz at 290 kW ERP from an antenna at 277 meters HAAT. According to Raycom, none of the WMC stations is dominant in the market based on the types of facilities involved and the level of diversity and competition in Memphis. Raycom asserts that none of the facilities has been modified and that the WMC stations' Arbitron audience ratings in the Memphis market are comparable to what they were at the time of the Scripps-Howard decision, namely WMC-TV ranked number 2 of 6 television stations, and WMC-AM and WMC- FM ranked 10 and 5, respectively, out of 22 radio stations in the Memphis market. 7. Competition and Diversity in the Market. The final factor Raycom addresses concerns the nature of the relevant market vis-a-vis the Commission's concerns about diversity and competition. Raycom refers to our findings in US Radio Stations, L.P., 11 FCC Rcd 5772 (1996), where we recently considered the transfer of control of US Radio, Inc. ("US Radio") to Clear Channel Communications of Memphis, Inc. ("Clear Channel"), and a request for permanent waiver of the one-to-a-market rule to allow Clear Channel, the licensee of WPTY-TV, Memphis, to acquire WDIA(AM) and WHRK-FM, Memphis. In evaluating Clear Channel's waiver request, we found, in May of this year, that Memphis is a top 50 market with 30 separately-owned and operated broadcast "voices" in the market. We also found that Memphis has nine daily newspapers, 27 weekly publications and 34 cable operators with a cable penetration of 58.1%. We concluded that the public benefits of common ownership of the Memphis stations involved in the US Radio/Clear Channel transaction outweighed any negative effect on competition and diversity in the market, and granted a waiver of the one-to-a-market rule. Accordingly, Raycom states that grant of the instant waiver will have no adverse affect on competition and diversity in the Memphis market. DISCUSSION 8. In analyzing a case-by-case request for waiver of the one-to-a-market rule, the Commission's "goal in all situations 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, on balance, Raycom's showing in support of its request for waiver of the one-to-a-market rule meets our case-by-case criteria, and that a waiver in this instance would not adversely affect competition and diversity in the Memphis market. 9. As discussed above, Raycom has shown economic benefits and cost savings, in excess of $400,000 per year, which will be derived from the continued joint operation of the WMC stations. According to Raycom, continued joint operation will ensure the continuation of the news and informational program offerings of these stations. The Commission has noted that significant cost savings and economies of scale are "precisely the type of public interest benefit from common station ownership which [it] envisioned as warranting a waiver of the one-to-a- market rules. . . ." Great American Television and Radio Co., 4 FCC Rcd 6347, 6349 (1989). 10. As to the types of facilities involved, the Commission endeavors to predict and avoid any significant adverse effect on diversity or competition from too powerful a combination. Id. at 6349. Here, while the technical facilities of the WMC stations are significant, we find that, given the substantial competition in the Memphis market, continuation of the AM/FM/TV combination does not present issues of market dominance inconsistent with the public interest. Although none of the WMC stations are experiencing financial difficulties, we note that not all of the case-by-case factors are relevant in every case. See Second Report and Order Recon., 4 FCC Rcd at 6491. 11. Finally, we find that the continued joint ownership of the WMC stations will not diminish diversity in Memphis, the 42nd television market. Our analysis indicates that, upon grant of these applications, Memphis will continue to be served by 18 AM stations, 18 FM stations, 4 VHF television stations and 5 UHF television stations. Of these 45 broadcast stations, we find, as we recently did in US Radio Stations, that Memphis is served by at least 30 separately-owned and operated broadcast "voices," as well as nine daily newspapers, 27 weekly publications and 34 cable operators with a 58.1% cable penetration. Because grant of these applications will continue an existing combination, there will be no decrease in this level of diversity and competition. For the foregoing reasons, we are persuaded that the public interest benefit of continued common ownership of WMC-AM, WMC-FM and WMC-TV in Memphis warrants a waiver of the one-to-a-market rule. CONTINUED SATELLITE STATUS 12. Note 5 to Section 73.3555 of the Commission's rules exempts from application of the multiple ownership rules those television stations that are "satellite" operations. Raycom seeks to acquire from Kelso Partners three satellite stations which are licensed to wholly-owned subsidiaries of Elcom. They are: WHLT(TV), Hattiesburg Mississippi, which operates as a satellite of WJTV(TV), Jackson, Mississippi; and KABY-TV, Aberdeen, South Dakota, and KPRY-TV, Pierre, South Dakota, which operate as satellites of KSFY-TV, Sioux Falls, South Dakota. 13. In Television Satellite Stations, 6 FCC Rcd 4212, 4215 (1991), the Commission established the requirement that all applicants seeking to transfer or assign satellite stations justify continued satellite status by demonstrating compliance with a three-part "presumptive" satellite exemption standard applicable to new satellite stations. Alternatively, applicants may demonstrate that there exist "other compelling circumstances" to warrant continued satellite authorization. The presumptive satellite exemption is met if the following three public interest criteria are satisfied: (1) there is no City Grade overlap between the parent and the satellite; (2) the proposed satellite would provide service to an underserved area; and (3) no alternative operator is ready and able to construct or to purchase and operate the satellite as a full-service station. Id. at 4212. Raycom requests continued satellite exemption status for the three stations, asserting that they presumptively qualify under the Commission's three-part standard. 14. Regarding the first criterion, a review of the authorized facilities of the stations demonstrates that the City Grade contour of WHLT(TV) does not overlap the City Grade contour of WJTV(TV), nor do the City Grade contours of KABY-TV and KPRY-TV overlap the City Grade contour of KSFY-TV. As to the second criterion, an applicant can use one of two different tests to demonstrate that an area is underserved. Under the "transmission test," a proposed satellite community of license is considered underserved if there are two or fewer full- service stations already licensed to it. Id. at 4215. Upon review, our records show that KTSD- TV, Channel 10, is the only other station licensed to Aberdeen, South Dakota, and KDSD-TV is the only other station licensed to Pierre, South Dakota. Similarly, WHLT(TV) is the only station licensed to Hattiesburg, Mississippi. Therefore, the areas are underserved. 15. With respect to the third criterion, an applicant must show that no alternative operator is ready and able to construct, or to purchase and operate, the proposed satellite as a full-service station. In support of the instant satellite request, Raycom submits a statement from Brian E. Cobb, an experienced broadcast broker. Mr. Cobb states that he has reviewed the relevant market information, and has concluded that the satellites are not in large enough communities to have sufficient economic viability to survive as stand-alones. He additionally asserts that his first-hand knowledge of operating stations and personal experience brokering numerous sales of television stations lead him to conclude that a viable buyer for any of the current satellites does not exist. In fact, Mr. Cobb declined the opportunity to take a listing on the satellites. Based on the above, continued operation of WHLT(TV) as a satellite of WJTV(TV), and KABY-TV and KPRY-TV as satellites of KSFY-TV is justified. OTHER MATTERS 16. A license renewal application for KAME-TV, Reno, is pending. Generally, where both a transfer of control application and a renewal application involving the same broadcast station are pending, the Commission refrains from acting on the transfer of control application starting on the date the station's renewal application must be filed until after it has taken action on the renewal. Where the pendency of a transfer application overlaps with the renewal cycle of a station involved in a multiple-station transfer, however, the Commission has allowed the transfer if there are no basic qualifications issues pending against the transferor and transferee, and if both the transferor and transferee indicate a willingness to assume the consequences associated with the transferee succeeding to the place of the current licensee in the renewal application. See Stockholders of CBS Inc., 11 FCC Rcd 3733, 3750 (1995); see also Capital Cities/ABC, Inc., 11 FCC Rcd 5841, 5900-5901 (1996); US Radio Stations, 11 FCC Rcd at 5775. 17. Here, the transfer of control applications are unopposed and there are no outstanding basic qualifications issues against the applicants. Raycom has demonstrated that it is otherwise qualified to acquire the stations, and that the transfer of control would serve the public interest. Moreover, KAME-TV, the station with a pending license renewal application, is part of this multiple-station transfer, and Kelso Partners and Raycom have stated their willingness "to abide by the consequences of Raycom's succeeding Kelso as the party controlling the Elcom stations." Thus, we find that the pending license renewal application is not an impediment to approving the transfer of control, and that the public interest is served by facilitating this multiple-station transfer without detriment to the public's ability to comment on this pending application. CONCLUSION 18. Having determined that the applicants are qualified in all respects, we find that grant of the transfer of control of the licenses held by Elcom, through its wholly-owned subsidiaries, to Raycom will serve the public interest. 19. Accordingly, IT IS ORDERED, That the above-captioned applications for transfer of control of Ellis Communications, Inc. from Kelso Partners IV, L.P. to Raycom Media, Inc. ARE GRANTED. 20. IT IS FURTHER ORDERED, That the request for a waiver of the Commission's one- to-a-market rule, 47 C.F.R.  73.3555(c), to allow Raycom's common ownership and operation of WMC-AM, WMC-FM and WMC-TV, Memphis, Tennessee, IS GRANTED. 21. IT IS FURTHER ORDERED, That the requests of Raycom Media, Inc. for operation of WHLT(TV), Hattiesburg Mississippi, KABY-TV, Aberdeen, South Dakota, and KPRY-TV, Pierre, South Dakota, pursuant to the satellite exemption of Note 5 to 47 C.F.R.  73.3555, ARE GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau