******************************************************** 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. ***************************************************************** 1. Before the Federal Communications Commission Washington, D.C. 20554 In re Application of ) ) FRIENDSHIP BROADCASTING, LLC ) (Assignor) ) ) and ) File No. BALH - 970508GW ) CLEAR CHANNEL RADIO LICENSES, INC. ) (Assignee) ) ) For assignment of license of ) KQSY(FM), Collinsville, Oklahoma ) MEMORANDUM OPINION AND ORDER Adopted: October 2, 1997 Released: October 6, 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 application for consent to assign the license of KQSY(FM), Collinsville, Oklahoma, from Friendship Broadcasting, LLC to Clear Channel Radio Licenses, Inc. ("Clear Channel"). Also pending before the Commission are applications for consent to assign the licenses of KQLL-AM-FM, Tulsa/Owasso, Oklahoma, from Truth Publishing Company, Inc. ("Truth") to Clear Channel, and for consent to assign the license of KOAS(FM), Broken Arrow, Oklahoma, from Pathfinder Communications Corp. ("Pathfinder") to Clear Channel. Clear Channel requests a permanent waiver of the Commission's one-to-a- market rule, 47 C.F.R. Section 73.3555(c), to permit the common ownership of a UHF television station, four FM stations and two AM stations in the Tulsa market. The waiver request is unopposed. Although we find, for the reasons set forth below, that Clear Channel has demonstrated that a conditional waiver of the one-to-a-market rule is warranted, by our action today, we grant only the license assignment application for KQSY(FM). We defer action on the license assignments of station KOAS(FM) from Pathfinder and stations KQLL-AM-FM from Truth pending disposition of the matters raised in informal objections filed by Niles Broadcasting, Inc., which are under consideration in a separate proceeding. See note 2. Background 2. Clear Channel is the licensee of KAKC(AM) and KMOD-FM, Tulsa, Oklahoma, and is under common ownership with Clear Channel Television Licenses, Inc., which is the licensee of UHF television station KOKI-TV, Tulsa, a Fox affiliate, and which brokers more than 15% of the weekly broadcast hours of UHF television station KTFO-TV, Tulsa, a UPN affiliate, pursuant to a local marketing agreement (LMA). The Commission granted a one-to-a-market waiver approving common ownership of KOKI-TV, KAKC and KMOD-FM in Tulsa 23, 5 FCC Rcd 727 (1990). Grant of the instant assignment applications would create a new radio-television station combination because the Grade A contour of KOKI-TV entirely encompasses the communities of license of the radio stations Clear Channel proposes to acquire. Accordingly, Clear Channel requests a waiver of the one-to-a-market rule to permit common ownership of KQLL-AM-FM, KOAS-FM and KQSY(FM) with KOKI-TV. As noted, if Clear Channel is permitted to acquire these radio stations, Clear Channel will control one TV, four FM and two AM broadcast stations in the Tulsa DMA. 3. Clear Channel bases its request on the one-to-a-market waiver standards adopted in the Second Report and Order in MM Docket No. 87-7, 4 FCC Rcd 1741 ("Second Report and Order"), recon. granted in part, 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 stations 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. Section 73.3555 note 7(2). Other waiver requests are evaluated using more rigorous case-by-case criteria set forth in the Second Report and Order. 4. Tulsa is the 59th largest DMA, according to Nielsen, and there is no indication that this waiver request involves a "failed" station. In any event, Clear Channel's request must be evaluated under the case-by-case standard because the proposed transaction involves the common ownership of more than one same service radio station with a television station. Under the case- by-case standard, 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 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 factors are necessarily relevant in each case. See Second Report and Order Recon., 4 FCC Rcd at 6491. Clear Channel submits a showing that addresses each of the five case-by-case factors. Waiver Showing 5. Public Service Benefits of Joint Operation. Clear Channel estimates $353,000 in savings annually from common ownership of the television station and the six radio stations, including elimination of office rent for one facility, elimination of redundant production studios, shared management and staff, shared promotions, electricity costs, repairs and maintenance. Clear Channel states that it expects to connect the radio and television stations by fiber optic cable, which would allow the stations to share information in both written and oral form, thereby enabling all of the stations to enhance their public affairs programming, to co-promote community events with much closer precision, and to improve their fundraising efforts for local organizations. In addition, Clear Channel anticipates creating a new full-time position for a Public Affairs Director whose only responsibility would be to continually monitor the communities' needs and provide responsive public affairs programming. Clear Channel also states that the stations will be able to engage in cross-promotion. 6. Clear Channel notes that KQSY(FM), Collinsville, functions substantially as a translator station that rebroadcasts the religious programming of a neighboring station without commercials. Clear Channel adds that its consolidated operations will enable Clear Channel to operate KQSY(FM) at lower marginal cost than a single station operator, so Clear Channel is uniquely situated to operate KQSY(FM) as a fully functioning radio station, thereby increasing the diversity of programming available in the Tulsa market. 7. Types of Facilities. UHF station KOKI-TV, a Fox affiliate, operates on Channel 23 with authorized power of 3310 kW maximum visual and 331 kW maximum aural from an antenna 1310 feet above average terrain. KMOD-FM is a 100 kW Class C station operating on 97.5 MHz from a 1327-foot antenna, and KAKC(AM) operates on 1300 kHz with 5 kW daytime power and 1 kW nighttime, using different directional antennas for day and night. KQLL(AM) is a 5 kW station operating on 1430 kHz, using a directional antenna at night. KQLL-FM is a 100 kW Class C station operating on 106.1 MHz from a 1321-foot antenna. KOAS(FM) is a 27.1 kW Class C2 station operating on 92.1 MHz from a 656-foot antenna. KQSY(FM) is a 3.9 kW Class C3 station operating on 101.5 MHz from a 630-foot antenna. Clear Channel points out that there are five VHF stations licensed to the Tulsa market, and that two UHF stations -- KDOR(TV) and KWMJ(TV) -- operate with greater authorized power than KOKI-TV. In addition, Clear Channel submits that the radio facilities are comparable to other stations in the Tulsa market -- e.g., the market contains eight FM stations not owned or proposed to be owned by Clear Channel that are authorized to broadcast at 100 kW. 8. Other Media Outlets. Aside from the stations listed above, Clear Channel owns no other media outlets in the Tulsa market. Although Clear Channel does provide programming to UHF station KTFO(TV), a UPN affiliate, pursuant to an LMA, Clear Channel notes that the market share of KTFO is only "2", compared with substantially higher market shares for three stations not owned by Clear Channel: VHF station KOTV(TV), a CBS affiliate with a 21 share; VHF station KTUL(TV), an ABC affiliate with a 19 share; and VHF station KJRH(TV), an NBC affiliate with a 14 share. One other independent VHF station, KOED(TV), also has a market share of "3". Clear Channel explains that the market share of the lowest ranked commercial VHF station is "14" -- seven times larger than the market share of KTFO -- and that even combining KTFO's share with the share of KOKI-TV (10 share), it is less than any of the shares of the three VHF stations. 9. Economic Status. Clear Channel states that none of the broadcast stations it proposes to own is in financial distress. However, Clear Channel asserts that KTFO(TV) was experiencing severe financial problems prior to Clear Channel's involvement with the station, and that it would be difficult for the station to continue to operate in the absence of the LMA. Clear Channel also states that KQSY(FM) sells no advertising and therefore generates no revenue, and that acquisition by Clear Channel will make KQSY(FM) economically viable as a fully functioning radio station. 10. Competition and Diversity in the Market. Clear Channel asserts that its acquisition of KQLL-AM-FM, KOAS(FM) and KQSY(FM) will have no significant effect on either the diversity of available media outlets or the distribution of economic power in the Tulsa market, which is the 59th largest DMA with 459,320 television households. According to Clear Channel, the Tulsa television metro market will be served by 11 AM stations, 21 FM stations, 5 VHF stations and 6 UHF stations, licensed to 23 separate owners. Clear Channel points out that a wide variety of other media are available, including local newspapers, VCRs, cable television, and low-power television stations. In particular, the market is served by 24 cable operators, with a cable penetration rate of 63.1%, as well as 12 daily newspapers and 19 weekly publications. The Tulsa market also has a 78% VCR penetration rate (352,200 households), as well as 19 low-power television stations. Discussion 11. Radio Ownership Rules. We turn first to Clear Channel's compliance with our local radio ownership rules. 47 C.F.R. Section 73.3555(a)(1). Our analysis of the data Clear Channel has submitted indicates that the radio market formed by the mutually overlapping contours of its proposed commonly owned radio stations consists of 46 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 8 commercial radio stations, not more than 5 of which are in the same service (AM or FM). Clear Channel's proposed ownership of six commercial radio stations, four FM and two 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, Clear Channel's acquisition of KQLL-AM-FM, KOAS(FM), and KQSY(FM) would serve the public interest. 12. One-to-a-Market Waiver. 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 KTFO(TV) 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 ownership waiver request. Our decision here in no way prejudges the issues in our ownership and attribution proceedings. We have proposed to attribute television LMAs to the brokering station where, as in Tulsa, 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. Attribution of Broadcast and Cable/MDS Interests, Further Notice of Proposed Rule Making, MM Docket Nos. 94-150, 92-51 & 87-154, 11 FCC Rcd 19895, 19908 (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. at 19908-09 (footnotes omitted). And, while we have proposed to grandfather those LMAs -- such as the LMA here -- that were entered into prior to November 5, 1996, the adoption date of the Television Broadcasting, Second Further Notice, 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." Television Broadcasting, Second Further Notice, 11 FCC Rcd at 21694. 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. Because this is a pending issue, we will condition the one-to-a-market waiver we grant here on the ultimate result reached in the pending rulemaking proceedings in attribution and television ownership concerning the significance and the grandfathering of television LMAs. 13. 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 the number of commonly-owned stations permitted prior to the adoption of the Telecommunications Act of 1996, Pub. L. No. 101-104, 110 Stat. 56 (1996). See Stockholders of Infinity Broadcasting Corp., 12 FCC Rcd 5012 (1996); S.E. Licensee G.P., 11 FCC Rcd 16727 (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. See Television Broadcasting, Second Further Notice, 11 FCC Rcd at 21689. Similarly, we conclude that a permanent, unconditional waiver would not be appropriate here. Clear Channel has, however, demonstrated sufficient grounds for us to grant a temporary waiver conditioned on the outcome of the rulemaking proceeding. Our view that a temporary waiver is warranted is based in part upon our analysis of Clear Channel's case-by-case showing in support of its permanent waiver request. 14. 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 form 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 Clear Channel'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 Tulsa market. 15. Clear Channel demonstrates that substantial cost savings and economic benefits will be derived from joint ownership of KOKI-TV, KAKC(AM), and KMOD-FM with KQLL-AM- FM, KOAS(FM) and KQSY(FM). Clear Channel estimates total savings of $353,000 from joint operation of the radio facilities, which will lead to enhanced programming and service benefits for the television and radio stations. Clear Channel expects to connect the radio and television stations by fiber optic cable, which would enable the stations to enhance their public affairs programming, to co-promote community events with much closer precision, and to improve their fundraising efforts for local organizations. In addition, Clear Channel anticipates creating a new full-time position for a Public Affairs Director who would continually monitor the communities' needs and provide responsive public affairs programming. Clear Channel also states that the stations will be able to cross-promote, which is an advantage 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). Finally, Clear Channel states that it will be able to operate KQSY(FM) -- which now functions substantially as a translator station -- as a fully functioning radio station, thereby increasing the diversity of programming available in the Tulsa market. We note that the public interest benefits resulting from the combination of KQSY with Clear Channel's existing facilities in the Tulsa market would support grant of a one-to-a-market waiver with respect to the license assignment of KQSY, if such license assignment were considered separately from the other stations that are the subject of this waiver request. 16. The Commission has stated that combinations involving UHF stations "may provide relatively greater public interest benefits and impose relatively fewer public interest costs." See id. at 1753; see also Moosey Communications, Inc., 8 FCC Rcd at 5248. The television station owned by Clear Channel and the television station for which Clear Channel holds an LMA are both UHF stations, and two of the radio stations that would be owned after consummation of this transaction are 5 kW AM stations. Although two of the FM stations that would be owned after consummation are 100 kW stations, the market contains eight additional 100 kW stations that will not be under Clear Channel's control. Clear Channel has also shown that the market shares of its television station and its LMA television station are small compared with the market shares of the network-affiliated VHF stations in the Tulsa market. "[A]s the level of competition and diversity in a market increases, [the Commission's] concerns grounded in the technical strength of the combining facilities decrease." Louis C. DeArias, 11 FCC Rcd 3662, 3666 (1996). Thus, while the technical facilities of some of the stations involved are significant, we find, given the substantial competing facilities in the Tulsa market, 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 6347, 6349 (1989). 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 at 3666; 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 Tulsa market. We have verified that there are 11 AM stations and 21 FM stations licensed in the Tulsa television metro market and 5 VHF stations and 6 UHF stations licensed in the Tulsa DMA. These 32 radio stations and 11 television stations will be licensed to 23 separate owners. A wide variety of other media are available, including 12 daily newspapers, cable television reaching 63.1% of total households, and eight low-power television stations. This level of diversity is consistent with the level we have approved in previous waiver requests. See, e.g., Alabama Universal Corp., 12 FCC Rcd 7556, 7562-64 (1997) (22 separate voices, one daily newspaper, and 78.6% cable penetration); Moosey Communications, Inc., 8 FCC Rcd 5247, 5249 (1993) (24 separate voices, 1 daily newspaper, and 73% cable penetration); Liggett Broadcast, Inc., 7 FCC Rcd 7124, 7125-26 (1992) (28 separate voices, 7 daily newspapers, and 51% cable penetration); South Central Communications Corp., 5 FCC Rcd 6697, 6698-99 (1990) (26 separate voices, 2 daily newspapers, and 57.9% cable penetration). 19. With respect to economic concentration and competition, our independent analysis indicates that the six radio stations that are the subject of this waiver request garner 18.9% of local radio advertising revenues, and KOKI-TV and KTFO(TV) garner 20.6% of local television advertising revenues. Together, these stations garner a combined television and radio advertising share of 20%, a figure consistent with temporary one-to-a-market waiver requests previously approved. See NewCity Communications, Inc., 12 FCC Rcd 3929, 3944 (1997) (29% combined television and radio advertising shares); S.E. Licensee G.P., FCC Rcd 16727, 16734 (1996) (24.2% combined television and radio advertising shares). 20. 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 Tulsa market. However, for the reasons set forth in paragraph 1, supra, today we grant only the application to assign the license of KQSY(FM), Collinsville, Oklahoma, from Friendship Broadcasting, LLC to Clear Channel Radio Licenses, Inc. Action on Clear Channel's proposed acquisition of KQLL- AM-FM from Truth Publishing Co., Inc. and KOAS(FM) from Pathfinder Communications Corporation will remain deferred pending consideration of the matters at issue in the informal objections filed by Niles Broadcasting, Inc. In the event we ultimately approve the acquisition of those stations by Clear Channel, our grant of the waiver will extend to those acquisitions so long as the facts and circumstances that we have determined warrant grant of the waiver have not significantly changed. 21. Accordingly, IT IS ORDERED, That the request for permanent waiver of the Commission's one-to-a-market rule, Section 73.3555(c), to permit common ownership of stations KOKI-TV, Tulsa, Oklahoma; KQLL-AM-FM, Tulsa/Owasso, Oklahoma; KOAS(FM), Broken Arrow, Oklahoma; and KQSY(FM) IS HEREBY DENIED. 22. IT IS FURTHER ORDERED, That the request for waiver of the Commission's one- to-a-market rule, Section 73.3555(c), to permit common ownership of stations KOKI-TV, Tulsa, Oklahoma; KQLL-AM-FM, Tulsa/Owasso, Oklahoma; KOAS(FM), Broken Arrow, Oklahoma; and KQSY(FM) IS HEREBY GRANTED to the extend indicated herein, subject to the outcome in the pending television ownership rulemaking proceeding, Television Broadcasting, Second Further Notice of Proposed Rule Making, MM Docket Nos. 91-221 & 87-8, 11 FCC Rcd 21655 (1996), and in the pending broadcast attribution proceeding, Attribution of Broadcast and Cable/MDS Interests, Further Notice of Proposed Rule Making, MM Docket Nos. 94-150, 92-51 & 87-154, 11 FCC Rcd 19895 (1996). Should divestiture be required as a result of those proceedings, Clear Channel is directed to file an application for Commission consent to sell the necessary station(s) within six months from the release of the final Orders in those proceedings. 23. 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 KQSY(FM), Collinsville, Oklahoma, from Friendship Broadcasting, LLC to Clear Channel Radio Licenses, Inc. (File No. BALH-970508GW), IS HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION Roy J. Stewart, Chief Mass Media Bureau