******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) Triathlon Broadcasting of Little Rock ) Licensee, Inc. ) (Assignor) ) ) and ) File Nos. BALH-970428GE, BALH- ) 970428GF, BALH-970428GG Clear Channel Radio Licenses, Inc. ) (Assignee) ) ) For Assignment of Licenses of ) KSSN(FM), Little Rock, Arkansas ) KMVK(FM), Benton, Arkansas, ) KOLL(FM), Maumelle, Arkansas ) MEMORANDUM OPINION AND ORDER Adopted: September 12, 1997 Released: September 16, 1997 By the Chief, Mass Media Bureau: 1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to delegated authority, has before it: (1) the above-captioned applications for assignment of the licenses of KSSN(FM), Little Rock, Arkansas, KMVK(FM), Benton, Arkansas, and KOLL(FM), Maumelle, Arkansas, from Triathlon Broadcasting of Little Rock Licensee, Inc. to Clear Channel Radio Licenses, Inc.; (2) a related request for permanent waiver of the Commission's one-to-a-market rule, which restricts common radio and television station ownership in the same market; (3) GHB of Little Rock, Inc.'s ("GHB"), licensee of KEZQ(AM) and KURB(FM), Little Rock, and KVLO(FM), Sheridan, Arkansas, Petition to Deny the assignment applications filed June 9, 1997; and (4) the parties' Joint Petition for Approval of Settlement Agreement seeking to dismiss the Petition to Deny. 2. Clear Channel Communications, Inc. ("Clear Channel"), through subsidiaries, already owns UHF station KLRT-TV (Fox affiliate), Channel 16, Little Rock, KDDK(FM), Jacksonville, Arkansas, and KMJX(FM), Conway, Arkansas. Clear Channel also brokers UHF station KASN(TV) (UPN affiliate), Channel 38, Pine Bluff, Arkansas, pursuant to a local marketing agreement ("LMA"). The instant assignment applications propose a new radio-television combination prohibited by Section 73.3555(c) because the 1 mV/m contours of KSSN, KMVK and KOLL encompass Little Rock, KLRT- TV's city of license. Clear Channel's proposed acquisition of these stations also implicates the radio local ownership rules. Consequently, Clear Channel has submitted a showing to demonstrate that its acquisition of KSSN, KMVK and KOLL complies with the radio local ownership rules and has requested a permanent one-to-a-market rule waiver. For the reasons set forth below, we will grant the Joint Petition for Approval of Settlement Agreement, dismiss the Petition to Deny and grant the assignment applications and a conditional waiver of the one-to-a-market rule. One-to-a-Market Waiver Showing/Petition to Deny 3. Clear Channel bases its one-to-a-market rule waiver request on the waiver standards adopted 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."). Under these criteria, 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"). The Commission 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. Otherwise, the requests must be evaluated under a more rigorous, case-by-case approach. See 47 C.F.R.  73.3555 n. 7. 4. We shall review Clear Channel's waiver request under the case-by-case standard because Little Rock-Pine Bluff is the 57th largest Designated Market Area ("DMA") according to Nielsen, and none of the stations involved are "failed" stations. Moreover, evaluation of the waiver requests under the case-by-case standard is appropriate because the proposed transactions involve the common ownership of more than one same-service radio station with a television station. See Memorandum Opinion and Order, MM Docket 91-140, 7 FCC Rcd 6387, 6394 n. 40 (1992). Under the case-by-case standard, the Commission makes a public interest determination based upon the following five 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) 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. In enunciating the five factors to be considered under the case-by-case standard, the Commission noted that not all five factors must be satisfied in each case, but rather the overall consideration of these factors must weigh in favor of granting the waiver request. Second Report and Order Recon., 4 FCC Rcd at 6491. In support of its waiver request, Clear Channel submits a showing which addresses each of the five factors. 5. GHB's Petition to Deny challenges Clear Channel's waiver showing on each point, but, as noted above, GHB has now requested to withdraw its Petition. A petitioner which seeks to withdraw its petition to deny as part of an agreement with the applicant may do so upon Commission approval. See 47 C.F.R.  73.3588. To obtain such approval, the petitioner, as well as the applicant, must submit affidavits stating that no consideration in excess of legitimate and prudent expenses has been paid in exchange for dismissal of the petition. Id. at  73.3588(a). Here, GHB and Clear Channel have submitted the required affidavits attesting to the absence of consideration paid or received in exchange for withdrawal of GHB's Petition to Deny and, therefore, the Joint Petition complies with Section 73.3588. Furthermore, we have reviewed the Petition to Deny and find that it presents no substantial and material questions of fact warranting further inquiry. Accordingly, we shall grant the Joint Petition and dismiss the Petition to Deny. 6. Benefits of Joint Operation. Clear Channel estimates that the proposed combination will realize savings of approximately $268,000 annually in personnel, rent and equipment costs. It states that with those savings it will hire a public affairs specialist to manage the stations' local community involvement. Clear Channel also asserts that the proposed combination will enable the newly-acquired radio stations to enhance their public interest programming through access to KLRT-TV's news and public affairs department. Finally, Clear Channel states that it expects to realize efficiencies through cross-promotion, joint sponsorship of community events and combined public service campaigns. 7. Other Media Outlets/Types of Facilities. Clear Channel currently owns two FM stations (KDDK and KMJX) and one UHF station (KLRT-TV) in the Little Rock-Pine Bluff DMA, and proposes to acquire three more FM stations (KMVK, KOLL, and KSSN). In describing the types of facilities involved, Clear Channel states that: (1) KDDK is a 44.2 kW (Class C1) FM station operating on 100.3 mHz from a 1369-foot antenna; (2) KMJX is an 81 kW (Class C1) FM station operating on 105.1 mHz from a 1053-foot antenna; (3) KLRT-TV operates on UHF Channel 16 with an authorized power of 5000 kW maximum visual effective radiated power ("ERP") and 500 kW maximum aural ERP; (4) KSSN is a 100 kW (Class C) FM station operating on 95.7 mHz from a 1663-foot antenna; (5) KMVK is a 16 kW (Class C2) FM station operating on 106.7 mHz from an 866-foot antenna; and (6) KOLL is a 100 kW (Class C) FM station operating on 94.9 mHz from an 1843-foot antenna. Clear Channel owns no other media outlets in the Little Rock-Pine Bluff DMA. As noted earlier, however, it does have an LMA with UHF Channel 38 station KASN. 8. Clear Channel asserts that the facilities of the stations in its proposed combination are comparable to those of other stations in the relevant market. Specifically, Clear Channel contends that in addition to KLRT-TV there are six VHF and four UHF television stations in the Little Rock-Pine Bluff DMA, and that three of the UHF stations (including KASN) have power equal or comparable to that of KLRT-TV. Clear Channel also identifies six Class C and Class C1 FM stations in the Little Rock TV metropolitan market, none of which will be under Clear Channel's control, with power equal or comparable to the Class C and C1 stations in Clear Channel's proposed combination. 9. Financial Condition. Clear Channel states that none of the broadcast stations at issue is in financial distress. 10. Competition and Diversity. Clear Channel asserts that the proposed combination will have no significant effect on either the diversity of available media outlets or the distribution of economic power in the relevant market. Based on the 1996 Broadcasting and Cable Yearbook, Clear Channel states that the Little Rock-Pine Bluff DMA is the 58th largest DMA, with 472,630 television households. It submits a revised study in support of its Opposition indicating that if the proposed transaction is consummated, there will be a total of 51 broadcast stations-- 17 AM, 23 FM, and 11 television stations-- licensed to 34 separate owners in the relevant market. Additionally, Clear Channel states that the Little Rock-Pine Bluff DMA is served by 37 cable operators, reaching 61 percent of the total households, as well as 14 daily newspapers, 27 weekly publications, and 33 low power television stations. 11. Clear Channel also has submitted a July 18, 1997 Federal Trade Commission ("FTC") letter announcing FTC's early termination of the Hart-Scott-Rodino Act, 15 U.S.C.  18a, premerger waiting period. Furthermore, Clear Channel contends that its postmerger market revenue shares of 41.27 percent of radio advertising and 24.2 percent of combined radio and television advertising are consistent with Commission precedent, citing S.E. Licensee G.P., 11 FCC Rcd 16727, 16734 (1996). Furthermore, Clear Channel has provided audience share data in support of its waiver request, indicating that KLRT-TV has a television audience share of "7" and KASN a share of only "3," that three other television stations in the Little Rock-Pine Bluff DMA not owned or operated by Clear Channel have substantially higher audience shares of "23," "15," and "16," respectively, and that the 1996 individual audience shares of the FM stations in Clear Channel's proposed combination are as follows: KDDK, 6.2; KMJX, 8.7; KSSN, 12.6; KMVK, 3; and KOLL, 4.4. Discussion 12. Radio Ownership Rules. We turn first to Clear Channel's compliance with our local radio ownership rules. 47 C.F.R.  73.3555(a)(1). Our analyis of the data submitted by Clear Channel indicates that the radio market formed by the mutually overlapping contours of its proposed commonly owned radio stations consists of 65 commercial radio stations. Under our rules, in a radio market with 45 or more commercial radio stations a party may own, operate, or control up to eight commercial radio stations, not more than five of which are in the same service (AM or FM). Clear Channel's proposed ownership of five commercial FM radio stations 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. See infra,  18-19. We conclude that, with respect to local radio ownership, Clear Channel's acquisition of KSSN, KMVK and KOLL would serve the public interest. 13. Local Marketing Agreement. Before considering Clear Channel's request for a waiver of the one-to-a-market rule, we must determine what weight, if any, we should accord Clear Channel's existing LMA with KASN in assessing that request. Currently, television LMAs are not attributable to the brokering station, nor, taken alone, are they considered a "meaningful" relationship within the scope of the cross-interest policy. At present, therefore, we will not accord significance to Clear Channel's existing television LMA in evaluating its waiver request. We note, however, that we have proposed to attribute television LMAs to the brokering station where the stations involved are in the same market and the brokerage arrangement includes more than 15 percent of the brokered station's weekly broadcast hours. Further Notice of Proposed Rulemaking, MM Docket Nos. 94-150, 92-51 and 87-154, 11 FCC Rcd 19895, 19908-09 (1996). Further, we have proposed that any LMA which would be attributable for duopoly rule purposes under this approach "would also count in applying our other ownership rules, including, for example . . . the one-to-a-market rule (or radio-television cross-ownership rule)." Id. (footnotes omitted). And, while we have proposed to grandfather those LMAs-- such as the LMA here-- that were entered into prior to the November 5, 1996 adoption date of the Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91-221 and 87-8, 11 FCC Rcd 21655 (1996) ("Second Further NPR"), we have also indicated that we would "reserve the right . . . to invalidate an otherwise grandfathered LMA in circumstances that raise particular competition and diversity concerns, such as those that might be presented in very small markets." Id. at 21693-94. Our decision here in no way prejudges the resolution of LMA attribution in our pending ownership and attribution proceedings. Thus, if we establish final rules for attributing and grandfathering LMAs, we would also assess whether the class of transactions involving radio, television and LMA interests, such as those involved in this case, should be permitted to continue. Consistent with our treatment of transactions raising similar issues, we will condition the one-to-a-market waiver we grant here on the outcome of these rulemakings. See REP WWBB G.P., 11 FCC Rcd 19689, 19693-94 (1996); S.E. Licensee, G.P., 11 FCC Rcd at 16732. 14. One-to-a-Market Waiver. Turning to the substance of Clear Channel's one-to-a-market waiver request, 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. See Maximum Media, Inc., 12 FCC Rcd 3391, 3395-96 (1997); see also S.E. Licensee G.P., 11 FCC Rcd at 16732-33; Shareholders of Citicasters, Inc., 11 FCC Rcd 19135, 19143 (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 NPR, 11 FCC Rcd at 21655. Similarly, we conclude that a permanent, unconditional waiver would not be appropriate here, but that Clear Channel has justified grant of a temporary waiver conditioned on the outcome of the rulemaking proceeding. 15. 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. Clear Channel has shown that there will be significant economies of scale resulting from consolidation of administrative, operating and technical expenses into a single operation. In particular, Clear Channel estimates a total annual savings of approximately $268,000 in personnel, rent and equipment costs. Clear Channel also has promised that these cost savings will result in significant benefits to the public through programming improvements, an enhanced local presence, and community-based outreach. In addition, Clear Channel states that the newly- acquired stations will undertake cross-promotions, which we have recognized as "one of the most significant benefits of joint ownership of radio and television stations in the same market." Second Report and Order, 4 FCC Rcd at 1747 (footnote omitted). 16. 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 6347, 6349-50 (1989). The combination for which the instant waiver is requested involves a Fox-affiliated UHF station, KLRT-TV, which competes in the Little Rock-Pine Bluff DMA with six VHF and four UHF television stations, two of which (excluding UPN-affiliated KASN, with which Clear Channel has an LMA) have power equal or comparable to that of KLRT-TV. Our independent analysis shows that there are three network-affiliated VHF stations not controlled by Clear Channel with greater shares of DMA television advertising revenue than KLRT-TV's 15 percent share. We have also independently confirmed that, although four FM stations in Clear Channel's proposed combination are authorized to operate at 100 kW, there are six FM stations in the Little Rock TV metro market with equal authorized power that will not be under Clear Channel's control. The fifth FM station in Clear Channel's proposed combination is a Class C2 station; there are two other Class C2 stations in the market. We also find that Clear Channel has demonstrated that due to the number of "voices" in the relevant market, the level of competition and diversity will remain high. See infra,  18-19. Thus, while the technical facilities of the stations involved are significant, given the substantial competing facilities in the Little Rock market we find that the proposed combination does not present issues of market dominance inconsistent with the public interest. 17. Although Clear Channel states that none of the broadcast stations at issue is in financial distress, we have previously indicated that not all five factors need be present to justify grant of a waiver. See Second Report and Order Recon., 4 FCC Rcd at 6491; Great American Television and Radio Co., Inc., 4 FCC Rcd at 6349. We have also 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., Louis C. DeArias, 11 FCC Rcd 3662, 3667 (1996); Atla Gulf FM, Inc., 10 FCC Rcd 7750, 7751 (1995); Secret Communications, L.P., 10 FCC Rcd 6874, 6877 (1995). 18. Finally, Clear Channel has shown that the proposed combination will not create any undue concentration of ownership or control of the broadcast media in the Little Rock market. We have independently verified that there are at least 40 radio stations in the Little Rock TV metro market, of which 28 would be separately owned after the proposed transaction. There are also 11 television stations (including KLRT-TV) in the Little Rock-Pine Bluff DMA, of which seven are separately owned. After the proposed transaction, these 51 stations would be licensed to 34 separate broadcast owners. Additionally, Clear Channel states that there are several other media outlets in the market, including 37 cable operators serving 61 percent of households, 33 low power television stations, 14 daily newspapers, and 27 weekly publications. This level of diversity is consistent with the levels we have approved in previous waiver requests. See, e.g., Louis C. DeArias, 11 FCC Rcd at 3665 (one-to-a-market waiver granted in 78th ranked market with 31 separate voices, 2 daily newspapers and 57.9 percent cable penetration). 19. With respect to economic concentration and competition, our independent analysis indicates that KLRT-TV garners 15.12 percent of television advertising revenue in the Little Rock-Pine Bluff DMA, and the FM stations in Clear Channel's proposed combination garner 44.02 percent of radio advertising revenues in the market. Together, the stations in the proposed combination have a combined television and radio advertising revenue share of 24.97 percent, a figure consistent with temporary, conditional one-to-a-market waiver requests previously approved. See, e.g., S.E. Licensee, G.P., 11 FCC Rcd at 16734 (40.4 percent of radio advertising revenue and 24.2 percent of combined television and radio advertising in 42nd ranked market). The FTC granted Clear Channel's request for early termination of the Hart-Scott-Rodino premerger waiting period, indicating that it will conduct no further antitrust review under the Guidelines and that the proposed transaction may proceed from its perspective. In the circumstances of this case, we conclude that the FTC's antitrust determination is both relevant and highly probative evidence that the proposed transaction will not pose unacceptable risks to competition in the relevant market. See Shareholders of Citicasters, Inc., 11 FCC Rcd 19135, 19143 (1996) (relying on Department of Justice antitrust determination to inform decision on one-to-a-market rule waiver requests). 20. We conclude that a temporary, conditional waiver is warranted. The Little Rock market is both diverse and highly competitive, and this transaction involves a non-dominant UHF television station. Although Clear Channel's commonly-owned facilities are technically significant, competing facilities do exist. Moreover, the economic efficiencies and program service benefits that would result from the consummation of the proposed transaction support grant of a temporary, conditional waiver. Ordering Clauses 21. Accordingly, IT IS ORDERED, that the parties' Joint Petition for Approval of Settlement Agreement IS GRANTED, and GHB of Little Rock, Inc.'s Petition to Deny filed June 9, 1997 IS HEREBY DISMISSED. 22. 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), to permit common ownership of Stations KLRT-TV and KSSN(FM), Little Rock, Arkansas, KDDK(FM), Jacksonville, Arkansas, KMJX(FM), Conway, Arkansas, KMVK(FM), Benton, Arkansas, and KOLL(FM), Maumelle, Arkansas, IS HEREBY DENIED. 23. IT IS FURTHER ORDERED, that a temporary waiver to permit common ownership of Stations KLRT-TV, KSSN, KDDK, KMJX, KMVK, and KOLL IS HEREBY GRANTED, subject to the outcome in the pending television ownership rulemaking proceeding, Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91-221 and 87-8, 11 FCC Rcd 21655 (1996), and in the pending broadcast attribution proceeding, Further Notice of Proposed Rulemaking, MM Docket Nos. 94-150, 92-51 & 87- 154, 11 FCC Rcd 19895 (1996). Should divestiture be required as a result of those proceedings, the Licensee is directed to file an application for Commission consent to sell the necessary station(s) within six months from the release of the Orders in those proceedings. Should the Licensee find it necessary to request an extension for any reason, it must make any such request no less than 45 days before the end of the divestiture period. 24. IT IS FURTHER ORDERED, That, having found the applicants fully qualified and that grant of the applications would serve the public interest, the applications to assign the licenses of KSSN (File No. BALH-970428GE), KMVK (File No. BALH-970428GF), and KOLL (File No. BALH- 970428GG) from Triathlon Broadcasting of Little Rock, Inc. to Clear Channel Radio Licenses, Inc. ARE HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart Chief, Mass Media Bureau