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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 Applications of ) ) RIVER CITY LICENSE PARTNERSHIP ) (Assignor) ) ) and ) ) KDNL LICENSEE, INC. ) File No. BALCT-960712IA (Assignee) ) ) For Consent to the Assignment of) License of Station KDNL-TV, ) St. Louis, Missouri ) ) and ) ) SINCLAIR RADIO OF ST. LOUIS ) File Nos. BALH-960721GH-GI LICENSEE, INC. ) (Assignee) ) ) For Consent to the Assignment of ) Licenses of Stations WVRV(FM), ) East St. Louis, Illinois, and ) KPNT(FM), Ste. Genevieve, Missouri) MEMORANDUM OPINION AND ORDER Adopted: April 30, 1997 Released: May 1, 1997 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 assignment of licenses of television station KDNL-TV (ABC, Channel 30), St. Louis, Missouri, and radio stations WVRV(FM), East St. Louis, Illinois, and KPNT(FM), Ste. Genevieve, Missouri, from River City License Partnership ("River City") to KDNL Licensee, Inc. ("KDNL Licensee") and Sinclair Radio of St. Louis Licensee, Inc. ("Sinclair Radio"), respectively (collectively "the Assignees"). The corporate parent of the Assignees is Sinclair Broadcast Group, Inc. ("Sinclair"). 2. Having no other no other broadcast interests in the St. Louis market, Sinclair 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 KDNL-TV, WVRV(FM) and KPNT(FM). In 1995, a permanent waiver of the one-to-a-market rule was granted to allow River City's common ownership of KDNL-TV, WVRV(FM) and KPNT(FM). Though no new one-to-a- market combination will be created here, the contemplated assignment of these stations to the Assignees requires a renewed one-to-a-market request because previously granted waivers do not run with the assignment of stations. For the reasons discussed below, we will grant the waiver request and the assignment applications, which are unopposed. REQUEST FOR WAIVER OF THE ONE-TO-A-MARKET RULE 3. Sinclair bases its waiver request on the one-to-a-market standards adopted in the Second Report and Order in MM Docket No. 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 operating 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. The Commission has stated, moreover, that pending the possible revision of the one-to-a-market rule, the case-by-case standard will be applied to those waiver requests for combinations involving more than one radio station in the same service in any market. See Revision of Radio Rules and Policies, 7 FCC Rcd 2755 (1992), recon. granted in part, 7 FCC Rcd 6387, 6394 n.40 (1992); see also Review of the Commission's Regulations Governing Television Broadcastingin MM Docket No. 91-221, 7 FCC Rcd 4111 (1992), Further Notice of Proposed Rulemaking, 10 FCC Rcd 3524 (1995). Although St. Louis is ranked as the 20th television market in the country, Sinclair submits its waiver request pursuant to the case-by-case standard because the proposed combination involves two FM stations in the same market. 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 the 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. Sinclair maintains that the cost efficiencies achieved from River City's joint operation of KDNL-TV, WVRV(FM) and KPNT(FM) will continue under Sinclair's common ownership of the stations. Specifically, Sinclair refers to River City's asserted annual cost savings totalling at least $300,000 from consolidation of administration and personnel ($125,000), shared studio space ($75,000) and cross-promotion of the stations ($100,000). Sinclair also notes that River City's projected expansion of KDNL-TV's local news coverage and improvement of WVRV(FM)'s technical facilities as a result of these cost savings have been realized. Moreover, Sinclair states that under its common ownership of KDNL-TV, WVRV(FM) and KPNT(FM), it will add to the public interest benefits made possible through the cost savings from joint operation of the stations, further reinvesting these cost savings into expanded local- programming for viewers and listeners in the St. Louis market. In particular, under its common ownership, Sinclair promises that: (1) KDNL-TV will produce and broadcast one additional hour per week of local non-entertainment programming geared to the needs and concerns of the St. Louis television market; (2) KDNL-TV will air "Take One," a weekly 30-minute, local children's program co-produced by several Sinclair television stations, and will produce and contribute segments to this program that are directed to the interests of children in the St. Louis market; and (3) the cost savings from joint operation of KDNL-TV, WVRV(FM) and KPNT(FM) will be reinvested in outreach to minorities in the St. Louis area. As indicated in the FCC Form 396-A accompanying the KDNL-TV assignment application, Sinclair will also donate a scholarship to a local college or university in the St. Louis area to be awarded to a minority majoring in the field of communications. 6. Other Media Outlets/Types of Facilities. Sinclair asserts that it presently owns no media outlets in the St. Louis market. In describing the types of facilities involved, Sinclair states that KDNL-TV is an ABC-affiliated UHF station operating on Channel 30 at an Effective Radiated Power (ERP) of 2,190 kW, and an antenna height above average terrain (HAAT) of 1,100 feet. For viewership, KDNL-TV competes with four commercial VHF stations in its DMA that are affiliated with Fox, CBS, NBC and the Warner Brothers network, respectively, and with one non-commercial VHF station affiliated with PBS. According to Sinclair, average Nielsen ratings data for the 1995 surveys indicates that, though having switched to ABC affiliation in August 1995, KDNL-TV remains tied for fourth with the Warner Brothers affiliate in terms of average station shares over the total day. KPNT(FM) is a Class C station operating on Channel 289 (105.7 MHz), with an ERP of 100 kW and an HAAT of 285 feet. WVRV(FM) operates on Channel 266 (101.1 MHz) with an ERP of 44 kW and an HAAT of 518 feet. WVRV(FM) has recently implemented an authorized modification of its facilities to change its antenna location from Zone 1 to Zone II, change channel class from Class B to Class C2, and operate at a slightly higher height above average terrain of 162 meters. A license application to cover this modification is pending. Sinclair claims that the Commission's findings in 1995, that "[w]hile such facilities are not insubstantial, the proposed combination of these facilities does not present issues of market dominance inconsistent with the public interest," also hold true today. 7. Financial Difficulties. Sinclair concedes that KDNL-TV, WVRV(FM) and KPNT(FM) do not meet the Commission's definition of "failed stations," as none of them are involved in bankruptcy proceedings or have been off the air for a substantial period of time. However, Sinclair contends that WVRV(FM) and KPNT(FM) have not established a firm economic footing in the St. Louis market. In support, Sinclair refers to the 1995 request for waiver in which River City estimated that, since 1991, the two stations had generated cumulative operating losses of $2.685 million. River City also pointed out that, according to Arbitron's Winter 1995 ratings data, KPNT(FM) had a 4.0 audience share, ranking ninth in the market, and WVRV(FM) had a 2.1 audience share, ranking 16th in the market. Sinclair claims that the performance of KPNT(FM) and WVRV(FM) has not materially improved since the Winter 1995 survey, Arbitron's Winter 1996 data showing KPNT(FM) having a 4.6 audience share and WVRV(FM) having a 1.6 audience share. 8. Effect on Diversity and Competition. Presently owning no broadcast stations in the St. Louis market, Sinclair maintains that it proposes "to do no more than acquire an existing `one-to-a- market' combination." In doing so, Sinclair argues that "no additional constriction of diversity or competition in the St. Louis market will be created by the assignments proposed here." Sinclair asserts that the St. Louis media market continues to be highly diverse and competitive, noting that the St. Louis DMA, ranked the 20th television market, has eight television stations, one non- commercial and seven commercial stations. Sinclair also states that Arbitron ranks St. Louis as the 17th largest Metro market, having a total of 52 radio stations, 38 commercial and 14 non-commercial stations. These 52 stations, Sinclair claims, are owned by 36 separate and distinct broadcast "voices." According to Sinclair's calculations, which take into account the existing one-to-a-market combination of KDNL-TV, WVRV(FM) and KPNT(FM), currently there are a total of 60 radio and television stations in the St. Louis market, owned by 43 separate and independent broadcast voices. In addition, Sinclair indicates that cable penetration in the St. Louis DMA is 52.1%, with cable systems offering, on average, approximately 30 channels of video programming. Sinclair further represents that the St. Louis DMA is served by seven daily newspapers and 118 weekly newspapers. 9. Discussion. The Commission's goal in evaluating a case-by-case request for waiver of the one-to-a-market rule 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, Sinclair's showing in support of its request for waiver of the one-to-a-market rule meets our case-by-case criteria, that a waiver in this instance is in the public interest, and that the waiver would not adversely affect competition and diversity in the St. Louis market. 10. As to the first criterion, the potential public service benefits of joint ownership, the Commission considers the public service benefits that will result from the proposed radio-television combination, such as projected economies of scale, cost savings, and programming and service benefits. Second Report and Order, 4 FCC Rcd at 1753. Sinclair has shown that the cost efficiencies derived from River City's joint operation of KDNL-TV, WVRV(FM) and KPNT(FM) will continue under Sinclair's common ownership of the stations. In particular, Sinclair anticipates similar annual cost savings amounting to $300,000 from the continued consolidation of administration and personnel, shared studio space and cross-promotion of the stations. Further, although there appears to be a reduction in the number of independent broadcast voices in the St. Louis market since we last approved the common ownership of KDNL-TV, WVRV(FM) and KPNT(FM) in 1995, there remain more than enough independent broadcast voices to assuage any concern over the continued joint ownership and operation of the stations. See infra  13. Finally, Sinclair represents that KDNL-TV will produce and broadcast one additional hour per week of local non-entertainment programming directed to the needs and concerns of the St. Louis television market. 11. With respect 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. Although the facilities at issue here are not insubstantial, their common control does do not present a risk of dominating the market in a manner inconsistent with the public interest. There are comparable or superior technical facilities competing in the market and Sinclair has demonstrated that KDNL-TV, an ABC-affiliated UHF station competing with four commercial VHF stations and one non-commercial VHF station, places fourth in terms of average station shares over the total day, while KPNT(FM) and WVRV(FM) have 4.6 and 1.6 audience shares, and rank ninth and sixteenth in the market, respectively. 12. In reviewing financial difficulties, the Commission "will consider information related to whether a station has long been offered for sale, to no avail." Second Report and Order, 4 FCC Rcd at 1753. The Commission has advised applicants relying on this factor to submit "appropriate documentation, including a history of the station's past financial losses and predictions of projected losses for the next several years." Id. at 1760 n.103. Notwithstanding its undocumented reference to River City's cumulative operating losses generated by KPNT(FM) and WVRV(FM), Sinclair has not shown that any of the stations involved in the transaction are experiencing financial difficulties. However, 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. 13. Finally, Sinclair has demonstrated that its proposed joint ownership and operation of KDNL-TV, KPNT(FM) and WVRV(FM) will not diminish competition or diversity in St. Louis, the 20th television market. Sinclair presently owns no other broadcast stations in the St. Louis market. St. Louis is served by eight television and 52 radio stations. Accounting for Sinclair's proposed acquisition of the existing KDNL-TV, KPNT(FM) and WVRV(FM) combination, of these 60 broadcast stations, St. Louis will be served by 36 separately-owned and operated broadcast "voices," seven daily newspapers and 118 weekly newspapers. Cable penetration in the St. Louis DMA is 52.1%. In addition, because Sinclair's proposed acquisitions will continue an existing combination, there will be no further decrease in this level of diversity and competition. Finally, the combined revenue share of the television and radio stations in the proposed combination accounts for 11% of the total television and radio revenues in the St. Louis market. This level of concentration does not pose a risk to competition that would warrant denial of Sinclair's requested waiver. For the foregoing reasons, we are persuaded that the public interest benefit of Sinclair's common ownership and operation of KDNL-TV, KPNT(FM) and WVRV(FM) justifies grant of a waiver of the one-to-a-market rule. CONCLUSION 14. Having determined that the applicants are qualified in all respects, we find that grant of the assignment applications will serve the public interest, convenience and necessity. 15. Accordingly, IT IS ORDERED that the above-captioned application for the assignment of license of television station KDNL-TV from River City License Partnership to KDNL Licensee, Inc. IS GRANTED. 16. IT IS FURTHER ORDERED that the above-captioned applications for the assignment of licenses of radio stations WVRV(FM) and KPNT(FM) from River City License Partnership to Sinclair Radio of St. Louis Licensee, Inc. ARE GRANTED. 17. 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 Sinclair's common ownership and operation of KDNL- TV, WVRV(FM) and KPNT(FM) IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau