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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 Application of ) ) Concrete River Associates, L.P. ) (Assignor) ) ) File No. BAPL-961218GM and ) ) QueenB Radio, Inc. ) (Assignee) ) ) For Assignment of License of ) KKPL(AM), Opportunity, Washington ) MEMORANDUM OPINION AND ORDER Adopted: May 21, 1997 Released: May 23, 1997 By the Chief, Mass Media Bureau: 1. The Chief, Mass Media Bureau, has under consideration: (1) the above-captioned application for assignment of the license of KKPL(AM), Opportunity, Washington from Concrete River Associates, L.P. ("Concrete River") to QueenB Radio, Inc. ("QueenB"); and (2) a related request for permanent waiver of 47 C.F.R. 73.3555(c), the Commission's one-to-a- market rule, which restricts common radio and television station ownership in the same market. The application and the waiver request are unopposed. For the reasons set forth below, we grant the assignment application and a conditional waiver of our one-to-a-market rule. Background 2. QueenB is wholly owned by Spokane Television, Inc. ("Spokane Television"), which currently controls one television, two FM, and two AM stations in Spokane, Washington, as a result of a previously granted one-to-a-market waiver. DeArias, 11 FCC Rcd at 3662. Specifically, KTRW(AM) and KZZU-FM are licensed to QueenB and KXLY(AM) and KXLY- FM, Spokane, Washington, are licensed to Spokane Radio, Inc., of which Spokane Television is the sole shareholder. Spokane Television is also the licensee of VHF television station KXLY- TV, Channel 4, an ABC affiliate in Spokane, Washington. Grant of the instant assignment application would create a new radio-television station combination because the Grade A contour of KXLY-TV entirely encompasses the community of license of AM station KKPL, Opportunity, Washington, the additional radio station QueenB proposes to acquire. Accordingly, QueenB requests a permanent waiver of the Commission's rules to permit common ownership of KXLY-TV and KKPL. If QueenB is permitted to acquire KKPL(AM), Spokane Television will control one TV, two FM and three AM stations in the Spokane Designated Market Area ("DMA"). 3. QueenB bases its current waiver request on the one-to-a-market waiver standards adopted in Second Report and Order, Amendment of Section 73.3555 of the Commission's Rules, the Broadcast Multiple Ownership Rules, 4 FCC Rcd 1741 (1989) ("Second Report and Order"); recon. granted in part and denied in part, 4 FCC Rcd 6489 (1989) ("Second Report and Order Recon."). Under these standards, the Commission presumes that waiver of the rule will serve the public interest in cases involving television and radio station combinations in the top 25 markets where at least 30 separately owned, operated and controlled broadcast licensees, or "voices," would remain after the proposed combination. Second Report and Order, 4 FCC Rcd at 1751-52. The Commission also presumes that the public will be served by the acquisition of "failed" stations, i.e., stations that have not been operating for a substantial period of time, or that are involved in bankruptcy proceedings. 47 C.F.R. 73.3555, n.7(2). Other waiver requests are evaluated using more rigorous case-by-case criteria, also set forth in the Second Report and Order. 4. QueenB first requests a waiver of the rule pursuant to the "failed station" standard arguing that we should presume this waiver to be in the public interest because KKPL was off the air continuously from September 6, 1993 until February 7, 1997. For reasons discussed below, we will not consider KKPL's waiver request under the "failed station" standard. 5. Alternatively, QueenB submits a specific factual showing pursuant to the "case-by- case" standard outlined in the Second Report and Order. We will consider the waiver request under this standard, whereby we make a public interest determination based upon the following criteria: (1) the potential public service benefits of joint operation of the facilities, such as the 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. Second Report and Order, 4 FCC Rcd at 1753-54. We note that not all five of the case-by-case factors are necessarily relevant in each case. Second Report and Order Recon., 4 FCC Rcd at 6491. QueenB submits a showing that addresses each of the criteria. Waiver Showing 6. Public Service Benefits of Joint Operation. QueenB contends that the proposed combination of KKPL(AM) with KTRW(AM), KXLY(AM), KXLY-FM, KZZU-FM, and KXLY-TV would create efficiencies that would save between $185,000 and $290,000 per year. Specifically, it states that the stations would share a single general manager, other management personnel, and production, programming and clerical staff, for an estimated annual savings of $140,000 to $190,000. Bulk discounts on services and supplies would save an estimated $25,000 to $60,000 per year. Combined purchasing of advertising and promotional expenses would save $5,000 to $25,000, and the sharing of operating facilities would save an additional estimated $15,000 in rent. In addition to these annual savings, QueenB also states that it will realize a one- time savings of an additional $200,000 by combining the technical facilities of AM stations KKPL and KXLY at a common site. 7. QueenB asserts that the expected savings will permit KKPL to invest more of its resources to provide programming. Specifically, QueenB states that it will promote more widespread availability of local news coverage and public service programming through use of the KXLY television and radio stations' state capital news bureau, weather center, and other news resources. QueenB also states that it plans to provide programming of interest to unspecified demographic segments of the community that are currently underrepresented in the Spokane market, lending to program diversity in the market. QueenB also contends that programming benefits will result from returning a previously silent station to the air. 8. Types of Facilities. KKPL(AM) is a Class D station that is licensed at 630 kHz and operates at 530 watts during the daytime, 53 watts during the nighttime. KTRW(AM) is a Class B station and operates on 970 kHz at 5000 watts, using a directional antenna during daytime operations, and operates at 1000 watts during nighttime directional operations. KXLY(AM), a Class B AM station, is operating full time at 5000 watts on 920 kHz utilizing a non-directional antenna. KXLY-FM is a Class C FM station operating on 99.9 MHz with 37,000 watts effective radiated power ("ERP") from a transmitter at 914 meters height above average terrain ("HAAT"). KZZU-FM is a Class C FM station operating on 92.9 MHz with a horizontal plane ERP of 81,000 watts from a transmitter at 634 meters HAAT. KXLY-TV, is a VHF station operating on Channel 4 as an ABC network affiliate, and operates at 48,000 watts visual and 9550 watts aural power from a transmitter at 933 meters HAAT. 9. QueenB acknowledges that its commonly owned stations are significant from a technical standpoint. However, QueenB maintains that other local stations have technically significant facilities as well. It identifies 14 additional AM stations (12 commercial and two licensed as non-commercial) within the composite city grade contours of the five radio stations it proposes to own. Of those facilities, it states that nine are equal or technically superior to QueenB's most powerful AM station, KXLY(AM), in daytime operation, and three equal KXLY(AM)'s facilities for nighttime operation. With respect to FM stations, QueenB maintains that the defined market contains 21 additional FM stations (20 commercial and one non- commercial), eight of which are Class C stations, as are QueenB's two FM stations. With respect to VHF television station KXLY-TV, QueenB argues that there are six VHF (three commercial and three non-commercial) stations in the Spokane DMA, as well as three UHF stations. 10. Other Media Outlets. As noted, Spokane Television, the parent corporation of both QueenB and Spokane Radio, Inc., owns and operates KXLY-TV, Spokane and QueenB owns KTRW(AM) and KZZU-FM, an AM-FM combination licensed to Spokane. A sister corporation, Spokane Radio, Inc., owns KXLY AM/FM, an AM/FM combination also licensed to Spokane. Neither QueenB nor its related corporations own other broadcast or print interests operating in the Spokane market. 11. Economic Status. KKPL(AM) was silent from September 6, 1993, until February 7, 1997. QueenB states in its pleading that KKPL had been unable to resume operations because of the "economic predicament of its licensees" and that it was not operational when Concrete River acquired the station in 1994 because KKPL had sustained "significant financial losses" under the stewardship of the previous licensee. 12. Competition and Diversity in the Market. The final factor in QueenB's showing is the nature of the relevant market in light of the Commission's concerns about diversity and competition. QueenB asserts that the Spokane DMA is the 74th largest in the country. QueenB states that there are a total of 41 radio stations within the composite city grade contours of the radio stations that it now commonly owns (KTRW(AM), KXLY(AM), KZZU-FM, and KXLY-FM), and that 22 of those stations are separately owned. QueenB also contends that there are six full-power commercial television stations including KXLY-TV in the Spokane DMA, each separately owned, and four non-commercial television stations with three different licensees. QueenB states that, including itself, there are therefore 31 separate voices in the Spokane market. QueenB also notes that there are nine additional radio stations that cover parts of the Spokane television metropolitan market ("TV metro market") from transmitter locations outside that market. Finally, QueenB states that there are nine separate cable companies serving 62.7 percent of households, 24 low power television stations, several Direct Broadcast Satellite licensees, a wireless cable system, two daily newspapers, two weekly newspapers, and one bi- weekly newspaper. Discussion 13. Radio Ownership Rules. We turn first to QueenB's compliance with our local radio ownership rules. 47 C.F.R. 73.3555(a)(1). Our analysis of the data QueenB has submitted indicates that the radio market formed by the mutually overlapping contours of its proposed commonly owned radio stations consists of 38 commercial radio stations. Under our rules, in a radio market with between 30 and 44 commercial radio stations a party may own, operate, or control up to seven commercial radio stations, not more than four of which are in the same service (AM or FM). QueenB's proposed ownership of five commercial radio stations, two FM and three AM, in this market complies with the numerical local ownership cap for radio stations. Moreover, our review of the record in this case reveals no other circumstances that would preclude grant of the applications under the radio ownership rules. We conclude that, with respect to local radio ownership, QueenB's acquisition of KKPL(AM) would serve the public interest. 14. One-to-a-Market Waiver. Because the present case also proposes a commonly owned television station, we must next determine whether to waive our one-to-a-market rule. In considering the current request for a permanent waiver we will follow the policy established in recent one-to-a-market waiver cases where the radio component to a proposed combination exceeds those permitted prior to the adoption of the Telecommunications Act of 1996. SeeMaximum Media, Inc., FCC 97-77 (released March 7, 1997); Stockholders of Infinity Broadcasting Corp., FCC 96-495 (released December 26, 1996); see also S.E. Licensee G.P., FCC 96-464 (released November 27, 1996); Shareholders of Citicasters, Inc., FCC 96-380 (released September 17, 1996). In such cases, the Commission declined to grant permanent waivers of the one-to-a-market rule, and instead granted temporary waivers conditioned on the outcome of related issues raised in the television ownership rulemaking proceeding, (Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91-221 and 87-8, slip op. at 35). Similarly, we conclude that a permanent, unconditional waiver would not be appropriate here. QueenB has, however, demonstrated sufficient grounds for us to grant a temporary waiver conditioned on the outcome of the rulemaking proceeding. 15. Waiver Standard. QueenB requests waiver of our one-to-a-market rule on the basis that it is a "failed" station or, in the alternative, on the basis that it satisfies our case-by-case criteria. We conclude that KKPL does not qualify as a "failed" station. KKPL had been off the air for over three years, but resumed operations as of February 7, 1997, to avoid the expiration of its license as a matter of law. See 47 U.S.C. 312(g). Additionally, KKPL's requests for special temporary authority ("STA") to remain silent under the present licensee, cited technical, rather than financial, difficulties as its reason to remain off the air. When, as here, there is clear evidence in the record that the station's silent status was the result of non-financial difficulties, we will not grant a presumptive waiver merely because a station had been off the air for a significant period of time. See Spectrum Radio, Inc., 1997 WL 40179, FCC 97-13 (released February 4, 1997). We conclude that KKPL's long-time silent status was the result of delays encountered in its desire to relocate a silent station to a new site rather than financial inability to resume operations. Based on this factor, coupled with the fact that KKPL has returned to the air, we find that QueenB is not entitled to a presumptive waiver under the "failed station" standard. 16. As KKPL is not a "failed" station, we would generally evaluate this case under the case-by-case standard, as set forth in the Second Report and Order. See Revision of Radio Rules and Policies (Recon.), 7 FCC Rcd 6387, 6394 n. 40 (1992). See also REP WWBB G.P., 1996 WL 683741, FCC 96-463 (released November 27, 1996); Moosey Communications, Inc., 8 FCC Rcd 5247 (1993). QueenB asserts, however, that market conditions in Spokane have not changed appreciably in the year since we determined that QueenB's existing one-to-a-market waiver would not create any undue concentration of ownership or control of broadcast media in the Spokane market. Because the station being acquired, KKPL(AM), was silent from September 6, 1993 until February 7, 1997, and thus had no share in the market during that period, QueenB argues that the market therefore does not now merit significant additional scrutiny. See DeArias, 11 FCC Rcd at 3662. To the extent QueenB contends by this argument that we need not reexamine the market before granting its application, we disagree. A new radio- television combination not before us in 1996 is presented by QueenB's application and we must evaluate that combination and its effect on the relevant market. See Moosey Communications, Inc., 8 FCC Rcd at 5247. To the extent QueenB is simply stating that a case-by-case analysis will not likely reveal any significant factual differences from our 1996 analysis, we see no harm in testing its assertion by reexamining the relevant market under our case-by-case standard. 17. Case-by-Case Standard. In evaluating a request for a 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 QueenB's showing in support of a waiver of the one-to-a-market rule meets our case-by-case criteria, and that a temporary conditional waiver in this instance is consistent with the public interest and would not have an adverse effect on diversity and competition in the Spokane market. 18. QueenB demonstrates that acquisition of KKPL will create efficiencies resulting in significant cost savings and the potential for enhanced programming and service benefits. In particular, the licensee presents a showing that it would save between $185,000 and $290,000 annually and would use this money to enhance the scope and reach of its programming. This would be possible in part because KKPL will have access to the local news gathering resources of television station KXLY. The provision of enhanced public interest programming on station KKPL(AM) is particularly significant because the station was silent until recently and QueenB provides assurance that it will keep the station on the air. 19. While QueenB's commonly owned facilities will be significant in technical terms, our independent analysis verifies that comparable competing facilities exist. The Commission's "concern with the types of facilities merging under the authority of a one-to-a-market waiver reflects our interest in assessing the potential impact of a proposed combination of stations in a given market in order that we might predict and avoid any significant adverse effect on diversity or competition from too powerful a combination." Great American Television and Radio Co., Inc., 4 FCC Rcd at 6349-50. Both of QueenB's FM stations, KXLY and KZZU, are Class C stations and our analysis shows that there are at least seven additional Class C stations in the Spokane TV metro market. Three additional AM stations in the Spokane TV metro market are comparable to the three AM stations in QueenB's proposed combination. Our independent analysis also shows that there are six VHF stations in the Spokane DMA in addition to QueenB's KXLY-TV, as well as three UHF stations. 20. With respect to financial conditions, as stated earlier, we do not consider KKPL(AM) a failed station nor has it demonstrated financial distress. However, we previously have indicated that not all five factors need be present to justify grant of a waiver. Second Report and Order Recon. 4 FCC Rcd at 6491. We also have granted a number of one-to-a-market waivers where there was no finding that any of the stations were in financial distress. See, e.g., DeAriasat 3662; Alta Gulf FM, Inc., FCC Rcd 7750, 7751 (1995), Henry Broadcasting Co., 11 FCC Rcd 1175 (1995); Atlantic Morris Broadcasting, Inc., 10 FCC Rcd 9495 (1995); Secret Communications Ltd., 10 FCC Rcd 6874 (1995). 21. Regarding QueenB's media holdings, we find that the proposed combination would not create undue concentration of ownership and control in the Spokane market. We have verified that there are at least 30 radio stations, of which 14 are separately owned, in the Spokane TV metro market. There are also nine television stations including KXLY-TV, of which seven are separately owned, in the Spokane DMA. After the proposed transaction, these 39 stations would be operated by 20 separate broadcast owners. Additionally, QueenB states that there are several other media outlets in the market, including nine separate cable companies serving 62.7 percent of households, 24 low power television stations, a wireless cable system, two daily newspapers, two weekly newspapers, and one bi-weekly newspaper. This level of diversity is consistent with the level we have approved in previous waiver requests. See e.g., Westar Broadcasting Group, Ltd., 11 FCC Rcd 11,221 (1996) (one-to-a-market waiver granted in 188th ranked market with 15 broadcast voices, two daily newspapers, two weekly newspapers, one monthly newspaper, and four separate cable systems with cable penetration of 77.6 percent). 22. With respect to economic concentration and competition, our independent analysis indicates that the five radio stations at issue here and KXLY-TV receive a combined television and radio advertising revenue share of 25 percent, a figure consistent with temporary one-to-a- market waiver requests previously approved. See NewCity Communications, Inc., FCC 97-107 (released March 26, 1997) (29 percent combined television and radio advertising shares); S.E. Licensee G.P., FCC 96-464 (released November 27, 1996) (24.2 percent combined television and radio advertising share). 23. We conclude, based on the record, that grant of a temporary, conditional waiver is appropriate. Grant of the waiver will result in economic efficiencies and facilitate enhanced public interest programming without undue effect on competition or diversity in the Spokane market. Ordering Clauses 24. Accordingly, IT IS ORDERED that the original request for a permanent waiver of the Commission's one-to-a-market rule, 47 C.F.R. 73.3555(c), IS HEREBY DENIED. 25. IT IS FURTHER ORDERED, that a temporary conditional waiver of the one-to-a- market rule, 47 C.F.R. 73.3555(c), to permit common ownership of stations KKPL(AM), Opportunity, Washington; KTRW(AM), KXLY(AM), KZZU-FM, KXLY-FM, and KXLY-TV, Spokane, Washington, IS HEREBY GRANTED, subject to the outcome in the pending television ownership rulemaking proceeding, Review of the Commission's Regulations Governing Television Broadcast Ownership, Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91-221 & 87-8, FCC 96-438 (released November 7, 1996). Should divestiture be required as a result of that proceeding, QueenB is directed to file an application for Commission consent to sell the necessary station(s) within six months from the release of the final Order in that proceeding. 26. IT IS FURTHER ORDERED, that, having found the applicants fully qualified and that grant of the application would serve the public interest, the application to assign the license of KKPL(AM), Opportunity, Washington, from Concrete River Associates, L.P., to QueenB Radio, Inc. (File No. BAPL-961218GM) IS HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau Xd~-4~