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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 ) ) Omni Broadcasting Company )File No. BAPH-970317GG (Assignor) ) ) and ) ) Flinn Broadcasting Corporation ) (Assignee) ) ) For Assignment of Construction Permit) of WJOI(FM), Germantown, Tennessee) MEMORANDUM OPINION AND ORDER Adopted: July 3, 1997 Released: July 8, 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-referenced application to assign the construction permit of WJOI(FM), Germantown, Tennessee, from Omni Broadcasting Company to Flinn Broadcasting Corporation ("Flinn"), and a related request for permanent waiver of the Commission's one-to-a-market rule which restricts common radio and television ownership in the same market. In 1995, a permanent waiver of the one-to-a-market rule was granted to allow Flinn's ownership of UHF station WFBI(TV) (Independent Channel 50), Memphis, Tennessee, WHBQ(AM), Memphis, Tennessee, WOWW(AM), Germantown, Tennessee, and KXHT(FM), Marion, Arkansas. See Big Ben Communications, Inc., 10 FCC Rcd 8129 (1995). The instant assignment application proposes a new radio-television combination prohibited by Section 73.3555(c) because the Grade A contour of WFBI(TV) encompasses the entire community of license of WJOI(FM). For the reasons set forth below, we grant the permanent waiver request and the assignment application. Background 2. The Commission announced one-to-a-market waiver standards in the Second Report and Order in MM Docket 87-7, 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."). The Commission presumptively favors waiver requests involving station combinations serving the top 25 markets where there are at least 30 separately owned, operated, and controlled broadcast licenses or "voices" after the proposed combination ("top 25 market/30 voice standard"). See 47 C.F.R.  73.3555 n.7. It also favors requests involving "failed" broadcast stations, that is, stations that have not been operating for a substantial period of time or are involved in bankruptcy proceedings. Id. Other waiver requests are evaluated on a case-by- case standard set forth in the Second Report and Order, under which the Commission makes a public interest determination based upon the following criteria: 1) the potential public service 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) any financial difficulties of the station 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. Memphis is the 42nd largest Designated Market Area ("DMA") according to Nielsen, and none of the stations involved are "failed" stations. As a result, Flinn seeks a review of its waiver request under the case-by-case standard. In support of its request, Flinn submits a showing that addresses the five case-by- case factors. Waiver Showing 3.Benefits of Joint Operation. Flinn estimates that it would save $115,000 annually from the common ownership of the television station and four radio stations, primarily from consolidating engineering and administrative functions for the five stations. Flinn also estimates a savings of $75,000 over the next five years resulting from a combined use of production, programming, and news gathering facilities. Flinn states it expects to save approximately $14,000 per year though station cross-promotions, including joint public service campaigns and other community events. The total savings from common ownership, according to Flinn, will enable it to hire additional staff to work in public affairs, community relations, children's programming, and to better ascertain community needs and develop programming to meet those needs. 4.Types of Facilities/Other Media Outlets. As noted, Flinn currently owns WHBQ(AM), Memphis, Tennessee, WOWW(AM), Germantown, Tennessee, WFBI(TV), Memphis, Tennessee, KXHT(FM), Marion, Arkansas, and proposes to acquire WJOI(FM), Germantown, Tennessee, from Omni Broadcasting Company. In describing the types of facilities involved, Flinn states that UHF station WFBI(TV) operates on Channel 50 with an authorized power of 1320 kW and a height above average terrain ("HAAT") of 315 meters. WHBQ(AM) is a directional Class B AM station operating on 560 kHz with reduced power at night (5 kW-D, 1 kW-N, DA-2). WOWW(AM) is also a Class B station operating on 1430 kHz with a 2.5 kw (2.5 kW-u, DA-N). KXHT(FM) is a Class A station operating on 107.1, with an authorized power of 3.0 kW and a HAAT of 328 feet (and with a construction permit to operate with an authorized power of 2.75 kW and a HAAT of 146 meters). WJOI(FM) is a Class A FM station operating on Channel 298A, with an authorized power of 3 kW and a HAAT of 100 meters. 5.Flinn represents that there are currently four VHF and five UHF television stations serving the Memphis DMA and that WFBI(TV) is one of five independent stations in the market. Flinn also represents that there are at least seven AM stations in the market with authorizations technically superior to WOWW(AM). As to the Class A stations, KXHT(FM) and WJOI(FM), Flinn states there are at least nine class C FM stations providing technically superior service. 6.Economic Status. Flinn states that it has experienced significant losses over the past several years, estimating the combined operating losses for the four stations at $220,000 for 1996 alone. Flinn attributes these losses to high station operating costs, capital costs incurred in the construction of WFBI(TV) and the modification of KXHT(FM), and low ratings. 7.Competition and Diversity in the Market. Flinn asserts that the proposed combination would not create any undue concentration or ownership or control of broadcast media in the Memphis market. Flinn provides Fall 1996 Arbitron ratings, in which KXHT(FM) is rated 18th, WHBQ(AM) 22nd, and WOWW(AM) 23rd. WJOI(FM) is not yet rated. Flinn notes that the combined audience share of the four stations would rank 13th in the market. Flinn asserts that its proposed combination compares favorably with the recent acquisition by Clear Channel Radio Licenses, Inc. in the Memphis market. See S.E. License, G.P., 11 FCC Rcd 16,728 (1996). Flinn states the grant of the one-to-a-market waiver in that case resulted in a more powerful market combination of seven radio stations and two TV stations with a combined audience share of 35.4 compared to Flinn's combined 2.5. In support of the instant waiver request, Flinn maintains that the Memphis market is diverse and competitive, with 27 separate owners holding 17 AM station and 17 FM station licenses, and 4 VHF and 5 UHF station licenses. Flinn also notes that there are a variety of other media available including cable with a 58% penetration rate, VCR's with a 78% penetration rate and 27 weekly publications. Discussion 8.Radio Ownership Rules. We first turn to Flinn's compliance with our local ownership rules. See 47 C.F.R.  73.3555. The principal community contour of WJOI(FM) overlaps some, but not all of the principal community contours of Flinn's commonly-owned radio stations licensed to communities in the Memphis area. A local radio market is defined by the area encompassed by the principal community contours of the mutually overlapping stations proposed to be co-owned. See Implementation of Section 202(a) and 202(b)(1) of the Telecommunications Act of 1996 (Broadcast Radio Ownership), 11 FCC Rcd 12,368 (1996). In this case, Flinn's proposed ownership of radio stations constitutes three radio markets. The stations in each market are: (1) WHBQ(AM), Memphis, Tennessee, WOWW(AM), Germantown, Tennessee and WJOI(FM), Germantown, Tennessee; (2) WHBQ(AM), WOWW(AM) and KXHT(FM), Marion, Arkansas; and (3) WHBQ(AM) and Channel 241C3, an unbuilt station in Tunica, Mississippi (File No. BPH-941223MA). 9.The local radio ownership rules, as mandated by the Telecommunications Act of 1996, restrict the number of radio stations which may be commonly owned in a local radio market. 47 C.F.R.  73.3555(a)(1). Flinn's showing demonstrates that there are at least 42 radio stations in each of these three markets. Our rules provide that 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. 47 C.F.R.  73.3555(a)(1)(i). Thus, Flinn's overall ownership of radio stations in each of these three markets would not exceed our radio ownership limits. Moreover, our review of the record in this case reveals no other circumstances that would preclude grant of Flinn's acquisition of WJOI(FM). Therefore, we conclude that, with respect to local radio ownership, nothing suggests that Flinn's acquisition of WJOI(FM) would be inconsistent with the public interest. See, e.g., S.E. Licensee G.P., 11 FCC Rcd at 16,732. 10.One-to-a-Market Waiver. At the outset, we note that the pending television ownership proceeding, in which the Commission is considering eliminating or modifying the one-to-a-market rule, does not preclude consideration of Flinn's request for a permanent one-to-a-market waiver. In Review of the Commission's Regulations Governing Television Broadcast Ownership in MM Docket Nos. 91-221 and 87-8, FCC 96-438 (Nov. 7, 1996) ("Second Further Notice of Proposed Rulemaking"), we stated that waiver requests submitted pending resolution of the proceeding will be considered under the current criteria for evaluating such requests. Second Further Notice of Proposed Rulemaking, at 35 and n. 130. Thus, the Second Further Notice of Proposed Rulemaking contemplates approval of permanent, unconditional waivers to allow radio-television combinations that do not propose common ownership of stations exceeding a combination of one television station, two AM stations and two FM stations, as long as the requested waivers are clearly consistent with Commission precedent. Id. Flinn's proposed combination would not exceed such combination. 11.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. The Commission does not require a waiver proponent to satisfy all five case-by-case criteria, but rather that the overall consideration of these factors establish that a waiver is in the public interest. Id. at 6493. We conclude that Flinn's showing in support of a waiver of the one-to-a-market rule meets our case-by-case criteria, and that a permanent waiver in this instance would not adversely affect competition and diversity in the Memphis market. 12.As to the first criterion, the potential public service benefits of joint ownership, the Commission considers the public service benefits that could result from the proposed radio-television combination, such as projected economies of scale, cost savings and program and service benefits. Second Report and Order, 4 FCC Rcd at 1753. In particular, Flinn asserts a total anticipated savings of $129,000 annually from the consolidation of administration and personnel, and cross promotion of the stations. Flinn has demonstrated that common ownership and joint operation of WHBQ(AM), WOWW(AM), KXHT(FM), WJOI(FM), and WFBI(TV) would create operating efficiencies resulting in significant cost savings. It also appears that the savings realized would permit programming improvements, an enhanced local presence, and community based programming and outreach. 13.With respect to the types of facilities involved in the waiver request, the Commission evaluates whether the proposed combination would adversely effect either diversity or competition in the local media market. See Great American Television and Radio Co. Inc., 4 FCC Rcd 6347, 6349 (1989). We have independently confirmed that there are 4 UHF stations and 4 VHF stations in the Memphis DMA competing with WFBI(TV), which has received no reportable audience share. We have also determined that the market includes 13 Class B AM stations, and 5 Class A FM stations. We find that the proposed combination of one UHF station, two Class B AM stations operating at 5 kW and 2.5 kW, and two Class A FM stations, both operating at an authorized power of 3 kW will not constitute technically dominant facilities that could have an adverse effect on diversity or competition. As noted in the Second Report and Order, combinations involving UHF TV or Class A FM stations may provide relatively greater public interest benefits and impose relatively fewer public interest costs. 4 FCC Rcd at 1753. We also find that Flinn has demonstrated that due to the number of "voices" in the market the level of competition and diversity will remain high. See infra  15. In addition, the facilities of the stations involved are technically modest, and there are comparable or superior competing facilities in the market and substantial overall competition. Consequently, we find that the proposed combination does not present issues of market dominance inconsistent with the public interest. Flinn holds no other attributable interests in the Memphis market. 14.With regard to Flinn's financial showing, we note that while Flinn's stations have experienced significant losses, it states that none are entitled to consideration as a failed station. Nonetheless, the Commission has granted waivers where there was no finding that any of the stations were in financial distress. See WHFS, Inc., 12 FCC Rcd 3965, 3968 (1997). 15.Finally, we find that Flinn has shown that the proposed combination would not create any undue concentration of ownership or control of the broadcast media in the Memphis market. In considering one-to-a-market waiver requests, the Commission counts television stations in the relevant Nielsen DMA and radio stations in the relevant television metro market. There are nine television stations licensed to nine separate owners in the Memphis DMA. Further, the 35 radio stations licensed to communities in the television metro market are held by 17 different owners. Therefore, after the assignment is approved, the proposed combination will be competing in a market with a total of 44 broadcast stations licensed to 23 separate owners. In addition, while the VCR penetration rate remains at 78%, the cable penetration rate has increased to 62%. There are also 27 weekly publications. This level of diversity is consistent with the level we have approved in previous waiver requests. See, e.g., Maximum Media, Inc., 12 FCC Rcd 331 (1997) (32 separate voices, 5 daily newspapers, 70% cable penetration); Louis C. DeArias, 11 FCC Rcd at 3665 (31 separate voices, 2 daily newspapers, 57.9% cable penetration). 16.With respect to economic concentration and competition in the context of one-to-a-market waiver requests, we consider the combined advertising revenue share of the proposed radio/television combination in the relevant market. Currently, KXHT(FM), WHBQ(AM) and WOWW(AM) have a combined advertising revenue share of 0.5%. Neither WJOI(FM) nor WFBI(TV) have reportable advertising revenue in any defined television or radio market. Given the lack of reportable revenue share, it appears unlikely that the stations' combined share would be dominant or pose a threat to competition. See, e.g., Alabama Universal Corp., FCC 97-138 (released Apr. 18, 1997). Conclusion 17.We conclude that Flinn's showing in support of a waiver of the one-to-a-market rule meets the case-by-case criteria, and that a waiver in this instance would not adversely affect competition and diversity in the relevant market. Accordingly, IT IS ORDERED, That the request to withdraw the petition to deny filed by Roger D. Morgan is GRANTED. IT IS FURTHER ORDERED, That the request for a permanent waiver of the Commission's one-to-a-market rule, 47 C.F.R.  73.3555(c), is GRANTED. IT IS FURTHER ORDERED, That the application for assignment of WJOI(FM), Germantown, Tennessee from Omni Broadcasting Company to Flinn Broadcasting Corporation (File No. BAPH-G970317GG) is GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau