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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 ) ) NOS, INC. ) File No. BAL-960926EI (Assignor) ) ) and ) ) CONCILIO MISION CRISTIANA ) FUENTE DE AGUA VIVA, INC. ) (Assignee) ) ) For Assignment of the License of ) WNOZ(AM), Aguadilla, Puerto, Rico) MEMORANDUM OPINION AND ORDER Adopted: April 10, 1997 Released: April 16, 1997 1. The Commission has before it the above-captioned application for assignment of license of WNOZ(AM), Aguadilla, Puerto Rico from Nos, Inc. to Concilio Mision Cristiana Fuente de Agua Viva, Inc. ("Concilio Mision"). There is 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 ownership of radio and television stations in the same market. The application is unopposed. For the reasons stated below, we grant the request for waiver and the application for assignment of license. 2. Concilio Mision is the licensee of independent UHF television station WQHA(TV), Channel 50, Aguada, Puerto Rico. By the instant application, Concilio Mision seeks to acquire AM station WNOZ, licensed to Aguadilla, Puerto Rico. WQHA(TV)'s Grade A contour completely encompasses Aguadilla, the community of license of WNOZ(AM), and the 2 mV/m contour of WNOZ(AM) encompasses the entire community of Aguada, WQHA(TV)'s city of license. Therefore, grant of the subject assignment application would result in Concilio Mision's common ownership of a television station and AM radio station in the same market. Consequently, Concilio Mision seeks a waiver of the Commission's one-to-a-market-rule, 47 C.F.R.  73.3555(c). Request for Waiver of the One-to-a-Market Rule 3. Concilio Mision bases its waiver request on the one-to-a-market standards adopted in the Second Report and Order in MM Docket No. 87-7, ("Second Report and Order"), 4 FCC Rcd 1741 (1989), recon. denied in part and granted in part, ("Second Report and Order Recon."), 4 FCC Rcd 6489 (1989). 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 licensees or "voices" after the proposed combination ("top 25 market/30 voice standard"). The Commission also favors waiver requests involving "failed" broadcast stations, that is, stations that have not been operating for a substantial period of time, or that are involved in bankruptcy proceedings. Otherwise, the requests must be evaluated under a more rigorous case-by-case approach. 47 C.F.R.  73.3555(c), note 7. 4. Television stations located in Puerto Rico are not ranked by Nielsen through statistics reflecting Designated Market Areas ("DMA"), and no other comparable national rating service applies to Puerto Rican markets. As a result, the waiver provisions applicable to the top-25 TV markets cannot readily be applied. Additionally, Concilio Mision is not claiming that WNOZ(AM) is a "failed station." In similar situations, the Commission has found it unnecessary to determine whether alternative data support a presumptive waiver under the top 25 market/30 voice standard, where as here, the case-by-case standard has been met. See WPRA, Inc (WPRA(AM), Mayaguez, Puerto Rico, FCC 96-481 (Jan. 3, 1997); WLDI, Inc. (WRAI(AM), San Juan, Puerto Rico), 10 FCC Rcd 12,150 (1995). Under this standard, the Commission is required to make a public interest determination based upon the following criteria: (1) the potential public service benefits that will arise from the joint operation of the facilities involved, 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. See Second Report and Order at 1753. Not all five factors under the case-by-case standard are necessarily relevant in each case. Second Report and Order Recon., 4 FCC Rcd at 6491,  18. In support of its waiver request, Concilio Mision submits a showing which addresses each of the case-by-case factors. 5. Benefits of Joint Operation. Concilio Mision submits that joint operation of the stations will result in significant cost savings, efficiencies of operation, and enhanced programming and service benefits. Concilio Mision anticipates combining the staffs of the radio and television stations, which will result in annual savings of $46,000 in salaries. Concilio Mision projects additional savings of $41,033.44 through the collocation of the WQHA(TV) and WNOZ(AM) studios, which will result in the elimination of duplicative expenses attributable to the maintenance and operation of office and computer equipment ($13,610.00), utilities ($9,640.94), insurance ($14,686.50), and rent ($3,096.00). Concilio Mision also anticipates savings through the sharing of programming and production costs with WQHA(TV) as well as with its two other commonly owned stations - WUJA(TV), Caguas, and WRSJ(AM), Bayamon. In addition, Concilio Mision projects that it will be able to generate additional revenue by combining and centralizing its marketing staff and cross-promoting its stations. Concilio Mision also states that the combined ownership will facilitate the sharing of professional services, including those of attorneys, accountants, financial institutions and insurance carriers. 6. Concilio Mision represents that the cost savings and increased revenue resulting from joint operation will allow it to invest in the production of additional public affairs programming for all of its stations. More specifically, Concilio Mision will increase its religious and educational "call-in" shows that form the mainstay of its existing programming and will provide other types of public interest programming. In this regard, Concilio Mision intends to produce educational programming specifically directed to the needs of children and teenagers and programming involving the discussion of issues of public importance. Concilio Mision also notes that WNOZ(AM) does not currently broadcast any news programming and states that it plans to use its cost savings to produce a daily evening news program. 7. Technical Facilities. WNOZ(AM) is an unlimited-time Class B AM station operating at 1340 kHz, with one kilowatt of power. WQHA(TV) is an independent UHF television station operating on Channel 50 with 501 kilowatts effective radiated power (ERP) and an antenna height of 343 meters. In addition, Concilio Mision states that the stations compete against comparable or more powerful stations in the market. Concilio Mision also argues that the facilities involved do not hold dominant positions in the market, and thus do not present a threat of undue concentration. In this regard, Concilio Mision relies on audience share data provided by Asesores, Inc., a company that reports competitive data relating to broadcast stations in Puerto Rico, and states that according to Asesores, neither station has an audience share that is significant enough to be reported. 8. Number of Media Outlets Owned by the Applicant in the Relevant Market. Other than its current ownership of WQHA(TV) and its proposed ownership of WNOZ(AM), Concilio Mision has no other media interests in the market. 9. Economic Status. Although Concilio Mision does not assert that WNOZ is a "failed station," it states that the station had aggregate revenue losses of $121,113.00 in 1995, and that for the first six months of 1996 WNOZ(AM) had experienced net losses of over $43,000.00. Concilio Mision also asserts that the Commission has recognized the financial difficulties experienced by stand-alone Puerto Rican stations and claims that without joint ownership, WNOZ(AM) will not likely survive, a fate that it contends has befallen a number of other small Puerto Rican radio stations. 10. Competition and Diversity in the Market. Concilio Mision states that because Puerto Rican stations are not ranked by national ratings services such as Nielsen or Arbitron, the Commission in the past has used the U.S. Census Bureau's designated Metropolitan Statistical Areas (MSAs) to define the applicable market. Concilio Mision claims that the relevant market should include all radio and television stations licensed to the Aguadilla and Mayaguez MSAs. According to Concilio Mision, there are four television stations licensed to communities in the Aguadilla MSA and five television stations licensed to communities in the Mayaguez MSA. In addition, Concilio Mision reports that there are eight radio stations (four AM and four FM) in the Aguadilla MSA and 16 radio stations (seven AM and nine FM) in the Mayaguez MSA. Concilio Mision states that these nine television stations and twenty-four radio stations constitute a total of twenty-six separate broadcast "voices." Concilio Mision also states that the Aguadilla MSA is served by two low power television stations, three daily newspapers of wide circulation and a cable system. Thus, Concilio Mision argues that common ownership of WNOZ(AM) and WQHA(TV) will not permit it to dominate the market or adversely affect diversity and competition. Discussion 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 has recognized that "[i]n smaller markets, where competition is usually more limited, of particular importance would be demonstrated financial difficulties and the practical question of whether a waiver grant . . . would in fact increase or decrease the vigor of competition and diversity in the market." Id. at 6491-6492. Thus, in determining whether the public interest would be served by grant of a one-to-a-market waiver, the Commission evaluates and balances other specific factors against its long-standing interest in maximizing competition and promoting diversity. Greater Muskegon Broadcasters, Inc., FCC 96-423 (Oct. 30, 1996). We find that Concilio Mision's showing in support of a waiver of the one-to-a-market rule meets our case-by-case criteria, and that a waiver in this instance is consistent with the public interest. 12. Concilio Mision has shown that common ownership and joint operation of WNOZ(AM) and WQHA(TV) will create operating efficiencies resulting in significant cost savings and the prospect of increased advertising revenues. It also appears that the savings realized and the increased revenues derived from cross-promotion of the stations will result in programming improvements such as increased public affairs programming and the production of a nightly news show. 13. With regard to technical facilities, and based on the comparable size and number of other AM, and television stations in the market, we determine that the resulting combination of an independent UHF television station and a Class B AM station operating with 1 kW will not vest Concilio Mision with technically dominant facilities that would have an adverse effect on diversity or competition. Our independent analysis of Concilio Mision's showing demonstrates that the market will be served by at least two other television stations with comparable or superior technical facilities to that of WQHA(TV), and three AM stations with comparable or superior technical facilities to that of WNOZ(AM). Moreover, audience share data complied by Asesores, Inc., which we have accepted in the past when considering Puerto Rican station combinations, confirms that the stations that Concilio Mision proposes to co-own are not dominant. See WLDI, Inc., 10 FCC Rcd at 12,152. Indeed, neither of these stations gained sufficient audience shares in the relevant market to be reported by Asesores, Inc. As the Commission noted in the Second Report and Order, "allowing joint operation of a low ranking radio and television station may enable the new combination to compete effectively..., thereby creating incentives for both outlets to improve their programming and service to the public." 4 FCC Rcd at 1760 n. 102. Additionally, neither Concilio Mision, nor any other entity controlled by Concilio Mision, owns any other broadcast stations in the market. 14. With regard to Concilio Mision's financial showing, we note that although WNOZ(AM) is not a failed station, it has experienced substantial operating losses during the past two years. Thus, it appears that WNOZ(AM)'s viability could be threatened if it continued to operate as a stand-alone AM station. See WLDI, Inc., 10 FCC Rcd at 12,152. 15. Finally, we turn to the level of diversity and competition in the relevant market. Indicia of the level of diversity include the number of broadcast outlets, the number of separately owned and operated "voices" in the market, and the presence of cable and non-broadcast media. As Concilio Mision points out, in prior cases involving one-to-a-market waivers in Puerto Rican markets, which are not ranked by national ratings services, the Commission has used the U.S. Census Bureau's designated Metropolitan Statistical Areas (MSAs) to help define the applicable broadcast markets. See WPRA, Inc., FCC 96-481 (Jan. 3, 1997); WLDI, Inc., 10 FCC Rcd 12,150 (1995). In these cases, we have counted television stations licensed to communities in the MSAs covered by the Grade A contour of the television station in the proposed radio-television combination. In addition, we have counted radio stations licensed to the same community as the radio stations involved in the proposed combination, as well as radio stations licensed to communities encompassed by the principal community contours of any of the proposed co-owned radio stations. See WPRA. We will follow this precedent, and thus will count television stations licensed to communities in the Aguadilla and Mayaguez MSAs. In this regard, we note that WQHA(TV) is licensed to Aguada, in the Aguadilla MSA, and that WQHA(TV)'s Grade A contour covers both the Aguadilla and Mayaguez MSAs. We will also count radio stations licensed to Aguadilla, WNOZ(AM)'s community of license, as well as stations that are licensed to communities encompassed by WNOZ(AM)'s principal community service contour. Id. 16. Based on information supplied by Concilio Mision and our independent analysis of that information, we find that after Concilio Mision's acquisition of WNOZ(AM) is consummated, the market will continue to be served by a total of 14 broadcast stations, six radio stations (three AM and three FM) and eight television stations. These stations include one commonly-owned radio- television combination, WQHA(TV)/WNOZ(AM), and one commonly-owned AM/FM combination, WNNV(FM)/WZNA(AM). Thus, the market's 14 stations will represent 12 separately owned broadcast "voices." In addition, other "voices" in the market include 2 low power television stations, a cable system with 53 channels, and 3 daily newspapers. 17. Although the relevant market here is small, we have granted a permanent one-to-a- market waiver in which a similar number of voices remained following the proposed station combination. Glendive Broadcasting Corp., 10 FCC Rcd 2708, 2711 (1995)(8 "voices"). The one- to-a-market waiver in Glendive involved an AM radio station facing financial difficulties similar to those currently experienced by WNOZ(AM). Moreover, this case involves the very situation in which the Commission has been predisposed to grant waivers of its one-to-a-market rule, i.e., "a case involving a station of the type that often has difficulties surviving in a competitive market, e.g., UHF TV, small AM or Class A FM station." Kargo Broadcasting, Inc., 5 FCC Rcd 3442, 3443 (1990). See, e.g., Salt of the Earth Broadcasting, Ltd., 9 FCC Rcd 3621 (1994). Given the nature of the AM and UHF television stations involved, and in particular the demonstrated financial difficulties facing WNOZ(AM), we conclude that any detrimental effect on competition and diversity that may result from common ownership of these stations is outweighed by the benefits such ownership will produce. Waiver of the one-to-a-market rule is therefore warranted. Additionally, because we find that the parties are fully qualified, we will approve the assignment of the license of WNOZ(AM) to Concilio Mision. 18. Accordingly, IT IS ORDERED, That the request for waiver of the Commission's one-to- a-market rule, 47 C.F.R.  73.3555(c), IS GRANTED, and the application for assignment of license of WNOZ(AM), Aguadilla, Puerto Rico, from Nos, Inc. to Concilio Mision Cristiana Fuente de Agua Viva, Inc. (BAL-960926EI) IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary